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White Pine to lay off 20%

The videoconferencing software maker will take a one-time restructuring charge and chop its workforce by 20 percent.

Plagued by continued softness in the videoconferencing market, White Pine Software (WPNE) has said it will chop its workforce by 20 percent and take a one-time restructuring charge for its second fiscal quarter.

White Pine will take a one-time charge of $650,000 to $850,000, to be recorded for its second fiscal quarter ending July 4. The charge is the result of a companywide reorganization that includes laying off 26 employees, or 20 percent of the company's workforce.

The charge includes severance expenses, software license write-offs, and other related costs. Earlier this month, White Pine announced that Howard Berke resigned as chairman, chief executive, and president.

There has been continued softness in the videoconferencing market as the industry continues to experience growing pains. But, analysts question if the restructuring will be enough to put White Pine back on track.

"A number of low-end product introductions, like White Pine's, have created confusion in the marketplace," said Herb Maher, an analyst with the Advest Group. "These products are not satisfactory for a meaningful business communication."

He added that low-cost videoconferencing was an interesting idea, and the company could continue to sell low-end, consumer oriented CU-SeeMe video chat products, but the initial surge in popularity is over.

Earlier this month, White Pine competitor PictureTel (PCTL) said it would miss analysts' expectations by 4 to 6 percent.

Users are concerned about standards and want quality images. Once that happens, this market will explode, said Aydin Tuncer, an analyst with S&P Equity Group. The rest of the year and the beginning of next will continue to be difficult, but once the issue of standards gets ironed out, there will be improvement, he said.

White Pine saw its stock fall nearly 5 percent today, however. It has seen its stock plummet since its initial public offering last October, when it was priced at $9 a share.

White Pine has been plagued by increasing competition from Microsoft's (MSFT) NetMeeting, Intel's (INTC) Internet VideoPhone, and other low-cost, software-only competitors.

The company said it has been reviewing its business and products over the past several weeks. It said the reorganization would allow it to focus on products like Enhanced CU-SeeMe and the White Pine Reflector, a client-server solution that allows users to participate in real-time videoconferencing over the Internet and intranets.

White Pine said the makeover will allow it to cultivate the markets where it already has competitive strength.

In May, White Pine attributed widening losses to increased competition and a delay in shipping the latest version of CU-SeeMe. The company reported a net loss of $2.3 million, or 26 cents per share, for the first quarter ending April 4.