VerticalNet Fires 150, Restructures
The vertical market provider gave pink slips to approximately 150 employees, or 8.3 percent of its full-time workforce. The staff cuts, which particularly effect sales and marketing staff, will include employees from some of the 22 acquisitions made by the company over the past two years.
Citing a need to eliminate "redundancies" across the board, new Chief Executive Officer Mike Hagan said in a company statement that VerticalNet would focus on growth opportunities within each of its VerticalNet Solutions and VerticalNet Markets businesses, eliminate acquisition-related redundancies and reduce costs to reach profitability. This includes closing redundant sales offices.
The company expects these initiatives to generate savings of approximately $11 million on an annualized basis and expects them to result in a one-time charge of approximately $2 to $3 million, or approximately 2 to 3 cents per share, in the first quarter of 2001.
As a silver lining, VerticalNet said its cash position is strong, with approximately $145 million in cash and other liquid assets on hand.
Hagan said the consolidations will vastly improve the company's financial status.
"The changes announced today are part of a clear, aggressive action plan to focus our strengths on high-potential opportunities within our core business units, VerticalNet Markets and VerticalNet Solutions," Hagan said in a press statement.
The staff cuts and reshuffling comes a week and a half after former CEO Joseph Galli, also an Amazon.com alum, left the embattled Internet sector for Newell Rubbermaid Inc. VerticalNet's stock took a tumble that Jan. 8, dropping 26 percent.
The company's stock closed at an even $6 Thursday.
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