Icon Medialab Cuts 325, to Refocus on Verticals
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Stockholm-based interactive agency Icon Medialab International said Wednesday that it will be restructuring and refocusing its worldwide operations in an effort to scale down and meet current demand for its services.
In all, 325 employees will be cut from the firm's offices around the globe, with 85 coming from Sweden. Icon Medialab, the largest shareholder of which is the U.S.-based ad conglomerate Interpublic Group of Companies, maintains offices in 15 countries, and had about 2,200 employees prior to the reductions.
The company said its layoffs, which will reduce the workforce by 16 percent, would take into account employees' competency and seniority, in addition to specific areas of client expertise. In connection with the restructuring, Icon Medialab said it would focus on serving multinationals in what it said were its strongest vertical markets, which include pharmaceuticals and financial services.
The move echoes similar moves made by many U.S. interactive agencies and integrators, like Chicago's marchFIRST and Atlanta-based iXL.
As part of what it's calling a "competency mix adjustment," Icon Medialab also said that it is planning to sell its BrandLab product marketing and strategic consulting practices in London, Stockholm and Berlin to IPG's FutureBrand, for an undisclosed amount. As part of the deal, Icon Medialab and FutureBrand would enter into an agreement to offer each other's services to clients.
The reductions will enable the company to lower its cost base by approximately 20 percent for the second quarter of 2001, as compared to the fourth quarter of 2000.
"Based on the steps now taken, we will be more customer-focused, fully leverage our unique global position, and improve the financial performance of the company," said Rens Buchwaldt, the company's chief financial officer, interim president and interim chief executive.
Icon Medialab will record a one-time charge in the first quarter of 2001 of approximately SEK 75 million (US$7.58 million), which consists primarily of severance expenses.
Restructuring would be financed through a promise of up to SEK 225 million (US$22.73 million), in the form of a convertible bond and equity line of credit from Credit Suisse First Boston.
The company's board of directors also said it is proposing to establish the post of executive vice chairman, which would be filled by Pier Carlo Falotti, overseeing European, Middle Eastern and African operations at Oracle, AT&T International and Digital Equipment Corp.
Falotti's appointment has to be confirmed by stockholders, as does the CSFB financing and a new options-based employee incentive program.
The restructuring comes on the heels of a management change last month, when former president and chief executive Ulf Dahlsten resigned to pursue other interests following a disappointing quarter. The company posted an before-charges operating loss of 59.1 million SEK (US$5.97 million), and a write-off of 40 million SEK (US$4.04 million) in unpaid bills from failed dot-coms.
Spokespeople at the firm said the board of directors is still looking for a full-time replacement.
Shares of Icon Medialab were trading at 9.4 SEK (US$0.94), up .25 SEK (US$0.03) at press time.