CoolSavings Cuts 24% of Workforce, Says Profits Will Still Come in 2001
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Cash-strapped CoolSavings cut an additional chunk of its workforce in an effort to stay afloat, through executives reiterate that the firm will still make it to profitability before the end of the year.
The Chicago-based company, which earlier this week conceded that it didn't have enough in cash and marketable securities to make it to profitability without outside assistance, laid off an additional 67 employees, or 24 percent of its workforce. Last month, the company cut ten percent of its staff, or 33 people.
"This reduction in work force was an extremely difficult decision to make, but a smart and disciplined one in response to fundamental changes in the market environment, particularly for advertising and marketing-related services," said chairman and chief executive Steven Golden.
In addition to a reduction in staffing, CoolSavings added that it's cutting expenses in marketing, administrative and technology expenses.
Company executives said earlier that the new cuts come as a continuation of cost savings measures it began in fourth quarter, which should reduce operating expenses to $40 million to $45 million, down from $57 to $60 million.
The news is not unexpected, as the company is drastically retooling to stretch $7 million in cash -- which is the amount it had at the beginning of the year -- as far as it can while it lines up additional funding. Executives said that the company has received offers for investments, but have been loathe to disclose details.
Golden added that Friday's cuts shouldn't impede the company's efforts to meet its profitability goals in the second half of 2001 -- goals, of course, that are contingent upon CoolSaving landing one of these investors.
The company's continued woes are a depressing reminder of the state of the online marketing industry, as the Web couponer has historically been one of its stronger players.
CoolSavings has a number of deals with offline marketers -- such as Acosta Sales and Marketing, which specializes in grocery store marketing -- to expand its offerings beyond the Web. It also has settled several patent disputes in its favor, and collects licensing revenue from the resulting arrangements.
Nevertheless, the company -- like peers in the online couponing space, like e-centives -- have been punished in recent months by investors and industry analysts for continued losses, and trade near their 52-week-lows. (E-centives, however, trades on the Swiss stock exchange, which is somewhat friendlier to U.S. dot-com plays, and is only down about 50 percent off its IPO price of 9.50 CHF.)