When Tony Nuzzo took over last fall as president and CEO of troubled Engage, he made it clear that the money-losing online advertising firm would have to cut costs, including staff, to become profitable.

Today the plain-speaking CEO showed that his bite is sharper than his bark.

The Andover, Mass., company, owned by beleaguered Internet holding company CMGI, announced this morning that it will cut 550 jobs, about half of its workforce, over the next few months through layoffs and attrition.

Engage said the restructuring would cost it betweeen $17 million and $20 million in cash charges and an additional $23 million to $25 million in non-cash charges. The costs are expected to be incurred mainly in the next two quarters.

The company said it would save between $120 million and $150 million a year in lower costs, with operating margins also improved.

Nuzzo said in a release, "We believe this major restructuring is necessary to enable the company to position itself for future growth and to significantly reduce costs. We are creating a fully integrated company with internal dynamics that facilitate more effective communication and decision making."

In September, when the company was led by since-resigned CEO Paul Schaut, Engage fired 175 employees to get down to a staff of 1,175.

In its most recent quarter Engage, which like online ad network peers Doubleclick and 24/7 Media has been pummeled from the plummet in Web advertising buys, lost $173.8 million, or 92 cents a share.

The company is also renegotiating customer contracts to improve operating margins.

Engage said it would boost margins by consolidating its multiple businesses and operating units into two primary divisions, software and media, eliminating what it said were many duplicate jobs. In which offices the layoffs would take place remained unclear as of Thursday morning.

Reflecting Nuzzo's desire to improve margins, Engage will show an increased focus on software instead of what until now has been its primary business -- the placing of online ads on the Web sites of more than 5,000 businesses in its network.

The media division in the first quarter accounted for more than half of revenues but just 9 percent of operating profit. Software accounted for about one-fifth of sales but more than half of the company's first quarter margin.

Engage will also move principal operations of the media group from San Francisco, where it took over operations of Flycast Communications last year, to its Andover headquarters.

The company also said it would combine ad serving for its AdKnowledge service division onto the rest of its media network platform, while continuing to support the AdManager software.

Dean Wiltse will lead the software division, while Tom Rothfels will lead the media unit.

Reflecting the new emphasis, Nuzzo said, "As interactive marketing continues to evolve and mature, Engage's software, combined with its media network, enables marketers to synchronize programs delivered over interactive and emerging media with those delivered over more traditional channels."

The company said its goal is to break even on a cash-earnings basis by the fall, its fourth fiscal quarter of 2001. It also stressed that it held $100 million in cash and cash equivalents as of November 30.