Office.com Burned by Winstar Cuts; Lays off 50%
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The decision by parent company Winstar Communications Inc. to lay off 2,000 employees and cancel expansion plans has left New York-based Office.com in a lurch.
Burned by the Winstar restructuring, Office.com laid off 90 of its 170 full-time employees yesterday and plans to gradually reduce the content published on its small business portal.
Winstar, a broadband services firm was hoping to use the Office.com portal to attract small businesses for its infrastructure services but now that expansion plans have been halted, those in the know say Winstar will sell its majority stake in the company.
Winstar has a two-thirds stake in Office.com. Viacom-owned television network CBS holds the remaining shares, having exchanged $42 million worth of advertising in April 1999.
"That is one of the options that is available," he said, declining to provide specifics. For now, Jones said the management team would spend the next few weeks trying to figure out a plan for the company's future.
"The site is up and all the features are still operating. Over the weekend and the next few days, we'll sort out the specifics of what we'll do going forward." A source close to the company said Winstar has asked Office.com's management to start shopping its two-thirds stake.
The company runs three Web sites -- Office.com, AtYourOffice.com and Individual.com - offering all kinds of information targeting executives of small business. It creates original content and also offers third-party news and research covering some 150 industries, business tools, community forums, and e-commerce.
Office.com, which is not profitable, is one of many advertising-supported Internet companies feeling the squeeze from the widespread slowdown in online ad spending.
The company, however, has an e-commerce arm that accounts for about 50 percent of its revenue. Office.com operates a Web-based catalog of office supplies, competing with the likes of Staples.com and Office Depot in that market.
The company also run a premium content section on the site, selling articles and business research material. In that space, the company has found it tough to set foot in a market with established players like Business.com, Factiva and Hoover's.
"The ad market has been difficult, there is no doubt about that. However, we have been fairly fortunate that we have a commerce arm to fall back on. We deliver our content to a qualified business audience which has helped us retain and attract advertisers," Jones said.
Among others, corporate clients Mastercard and Hewlett Packard have advertising agreements with Office.com.