Promotions.com Loss Widens
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Online promotion firm Promotions.com said it's starting to see a payoff from its staff cuts late last year, but that didn't help it in its fourth-quarter results, in which it posted a penny greater loss than in third quarter.
Before one-time charges (including a $1 million restructuring charge), loss for the fourth quarter 2000 was $5.9 million, or $0.41 per share, on revenue of $5 million. That's better than in the year-ago period, when the firm posted a loss of $7.9 million or $0.56 per share for the fourth quarter 1999 -- but it's a penny per share more than it lost in third quarter.
Additionally, the one-time charge bumps up New York-based Promotions.com's fourth quarter per-share loss to $0.48.
Total revenue for the year rose 155 percent from 1999, to $26.6 million. Overall, however, the company reported a growing net loss of $24.4 million, or $1.71 per share, for the year. That's also wider than 1999's loss of $18.4 million, or $1.22 per share.
Despite posting wider losses, the company said it managed to decrease its cash burn for the fourth consecutive quarter, to $2.4 million. As of the end of last year, the firm had $17.7 million in cash, sufficient capital to execute its business plan in 2001 and achieve profitability, according to the firm's chairman and chief executive, Steven Krein. The company did not give guidance as to when that might be.
"Since we continuously evaluate the changing market conditions, we were able to foresee the changes the e-marketing sector experienced beginning in the second half of 2000, and we reduced our cost structure to better position us for the future," Krein said of the extensive restructuring the company underwent in late 2000.
The company cut about 250 employees during its fourth quarter, but said the efforts will have more of a positive impact moving forward, by putting it in a better position to reach profitability. During those cuts, the firm eliminated redundant positions, closed several sales offices and consolidated several of its New York offices.
Promotions.com also said it cut discretionary initiatives in marketing, business development and product development, it said. All told, the reorganization is anticipated to achieve approximately $12.3 million to $12.8 million in annual savings for 2001.
But despite the overall effort for online marketers to move away from dot-com clientele, dot-coms still comprise a majority -- 56 percent -- of Promotions.com's revenue. To the firm's credit, however, that number is down from 69 percent in third quarter and 89 percent in the fourth quarter of 1999.