CoolSavings Lays Off 33, Lowers Guidance
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Online incentive marketer CoolSavings said it would cut about 10 percent of its workforce, or 33 employees, in order to streamline and take advantage of growing efficiency.
Chicago-based CoolSavings said the cuts would come from areas in which it has established "improved processes". The company said those layoffs, along with cuts in its marketing budget, should save CoolSavings about $19 million in operating expenses in 2001, it said.
CoolSavings added that the cuts should still allow it to reach profitability some time in the second half of 2001.
"As we have matured, CoolSavings has become more efficient in running our business -- from how we market ourselves, to our day-to-day operations," said chairman and chief executive Steven Golden. "This maturity enables us to continue ... with a more streamlined, cost-effective organization."
The company also lowered guidance for its 2001 fiscal year, anticipating revenue in the $60 million to $70 million range -- $10 million lower than previously predicted. The company did say it expects operating expenses to drop to $57 million to $60 million, down from earlier guidance of $76 million to $78 million.
"Despite market conditions, we continue to see positive recognition by our growing client base of leading brick and mortar brands that our solutions are delivering," Golden said. "In good times and bad, companies will continue to promote themselves and CoolSavings offers an efficient and cost-effective ways to reach and retain customers."
The layoffs continue recent efforts at reorganization and retooling for the company, following disappointing third-quarter earnings.
Last month, Golden said he would be ceding the post of president to Matthew Moog. Moog, who previously served as executive vice president for sales, marketing and product management, is charged with handling day-to-day operations as well as sales and marketing.
Golden waved away suggestions that the promotion was aimed at steadying the firm in the wake of October's missed earnings estimates, and a subsequent drop in stock price to below the $1 mark -- putting it at risk for a NASDAQ delisting.
A few weeks before the promotion was annnounced, the company made another move that gives some indication of the company's intended direction moving forward -- a direction that involves moving offline with its services. CoolSavings announced a pact with Acosta Sales and Marketing, that would enable the firm to introduce integrated online and offline promotions in Acosta's more than 156,000 grocery retailers nationwide. Jacksonville, Fla.-based Acosta provides outsourced sales and marketing services to manufacturers of food and other consumer packaged goods.
At press time, shares of CSAV were trading at $1, unchanged from Thursday's close.