Promotions.com Cuts Additional 25 Percent, Will Rename Unit
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Promotions.com said Tuesday that it has cut its workforce by about 25 percent amid continuing changes in internal structure.
Company execs declined to confirm the exact number of positions eliminated, although they attributed the staff cuts to a weakened online advertising market. Most of the posts cut were among the staff of its sweepstakes aggregation site Webstakes.com, officials said.
"The streamlining of Webstakes.com was necessary because of the pricing pressure in the online advertising market," said Webstakes.com president Kenneth Grosso. "We have consistently demonstrated the ability to provide valuable advertising and direct marketing services that help our clients build strong customer relationships and increase sales leads. The streamlining allows us to better position ourselves to serve our clients in an efficient manner and focus on profitability."
The latest cuts follow October's layoffs of 13 percent of New York-based Promotions.com's workforce, which was billed as a restructuring move to cut costs. That round of pink slips lowered the employee count to about 150.
Now, a source close to the company puts the number of remaining employees at "more than 100" and says that several had tendered resignations between the two round of cuts.
While the company beat lowered estimates for third quarter -- with a net loss of $5.7 million, or $0.40 per share -- the continued slimming down of its workforce suggests Promotions.com is working to offset effects of the online ad spending crunch.
At the time of its earnings estimates revision, Promotions.com said its potential shortcomings were due to a decreasing number of promotions based on Webstakes.com.
At press time, shares of PRMO were trading at $.50, down about 6 percent -- and well off the company's 52-week high of $35. Additionally, if the company doesn't boost its share price soon, it could face delisting from the NASDAQ exchange -- the exchange typically boots companies whose share prices linger below the $1 mark.
In other company news, Promotions.com said that it will rename one of its two divisions. In addition to Webstakes.com, on which the company places client sweepstakes, Promotions.com's Custom Solutions division will be renamed "Promotions.com".
Promotions.com is currently running promotions for several traditional marketers, including Universal Studios Home Video, FleetBoston Financial and Entertainment Weekly. Company spokespeople said the renaming was done largely to drive additional client traffic to Custom Solutions, which basically runs online sweepstakes on clients' sites.
"Webstakes has some pretty good brand equity, and [the company wanted Custom Solutions to] take advantage of the brand equity identified with Promotions.com," said Gavin Skillman, Promotions.com's head of public relations.
"Especially as traditional marketers move online and integrate their online and offline marketing campaigns, Promotions.com has become synonymous with overall products and solutions, and we just felt it would best benefit the entire company," Skillman added.