MyPoints CEO Resigns After Difficult Quarter
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Online loyalty marketer MyPoints.com's founder and top executive Steve Markowitz resigned Thursday, following a difficult quarter for the company.
"The market has changed dramatically since I founded MyPoints.com in 1996," Markowitz said during a conference call Thursday evening.
"While I have enjoyed building MyPoints.com into the Internet's leading loyalty marketer, I believe that the company needs a chief executive experienced in taking high-growth companies to the next stage of development," he added. "I look forward to remaining on the board and supporting the company as we grow our business."
Markowitz will remain with the company as chairman through 2000, and as a director thereafter.
MyPoints said its board is actively searching for a new chief executive to replace Markowitz, and has retained executive search firm Heidrick & Struggles.
Layton Han, former senior vice president of corporate and business development, also assumed the position of president. Han originally joined the company as its first chief financial officer.
The management shakeup news comes as MyPoints posts a quarter of mounting losses.
MyPoints reported third quarter revenues of about $14.5 million, in line with previously announced expectations. But the company also posted a third quarter net loss of $12.8 million, or $0.36 per share, versus a pro forma net loss of $8.3 million, or $0.40 per share, in the year-ago period.
Wall Street expected a per-share loss of $0.39. That's after the company issued a profit warning last month; previously, analyst consensus expected a loss of $0.28 per share.
"Part of the problem certainly lies in the broad industry slowdown, particularly in dot-coms' advertising spending, but that isn't the whole story," said MyPoints chief financial officer John Steuart. "Our pricing structure didn't respond rapidly enough to changing market conditions ... That was our first mistake, which we corrected in September through promotions and discounting."
Steuart also pointed to MyPoints' "highly complex" acquisition and integration of loyalty marketer CyberGold as a management distraction.
"In a nutshell, we reacted too slowly to the changing marketplace in part due to rudimentary management information systems and the attention paid to the CyberGold acquisition," he said.
MyPoints said in October that it would axe about 120 positions, or about 29 percent of its work force, in conjunction with the acquisition and streamlining efforts. The company said this should cuts costs by about $8 million.
Steuart said the company also plans to give its sales force more flexibility in pricing, to limit its e-mail inventory, and to "rationalize our cost structure ... to get MyPoints.com back on track."
As of September 30, 2000, the company had about $125 million in cash, cash equivalents and short-term investments. But MyPoints said it believes it has sufficient capital resources to grow and achieve profitability, which it anticipates happening in the fourth quarter of 2001.
At press time, shares of MYPT
were trading down 5.26 percent, at $2.25.