Internet Messaging Infrastructure platform provider Critical Path Inc. Tuesday (April 10) announced it will lay off approximately 450 employees, including its CEO and an executive VP, and eliminate non-core offerings from its product lineup.
“Today marks a new beginning for Critical Path,” David Hayden, Critical Path’s founder and executive chair, said in a prepared statement. “The last weeks have been difficult for Critical Path, but now we have turned the corner with the implementation of a reorganization designed to reduce costs and focus the company on its core products.”
The company has re-organized its management team to speed implementation of a strategic plan to put the company back on the path to profitability, laying off Diana Whitehead, president, and Mari Tangredi, executive VP of business development, sales and professional services, while appointing Bill McGlashan as interim chief operating officer and Amy Rao as interim VP for sales.
Bill McGlashan is the CEO of the Vectis Group, a world-wide technology investment company. Amy Rao is the CEO of Integrated Archive Systems (IAS), a systems integrator and managed services company she founded in 1994.
Under the strategic plan, Critical Path is reorganizing around its fundamental business of developing, producing and providing commercial e-mail carrier services. At Critical Path’s core will be the company’s Internet Messaging Infrastructure platform, including mail, calendar, address book, file storage, management services, directory and meta-directory, and access services supporting wireline and wireless users.
The company plans to reduce costs by eliminating products that are not central to the company’s long-term growth strategy, closing redundant offices, phasing out non-essential services, and reducing personnel who are not involved in Critical Path’s core business.
In February, Critical Path CEO Doug Hickey resigned, while President David Thatcher and VP Worldwide Sales William Rinehart left the company after being placed on leave amidst an investigation of accounting irregularities. At that time, founder Hayden returned to take the helm as executive chair. Last week, the company announced restated financial results that were up to 20 percent lower than previously stated.
Revenue for the third quarter of 2000 was restated to $35.3 million, down $9.7 million from revenue of $45.0 million reported on October 19, 2000. The net loss and net loss per share in the third quarter, excluding special charges, have been restated to $18.6 million and $0.30 per share, compared with a net loss and net loss per share, excluding special charges, of $8.7 million and $0.14 per share, reported previously.
Revenue for the fourth quarter of 2000 was revised to $42.3 million, down $9.7 million from revenue of $52.0 million announced on January 18, 2001. The total net loss and net loss per share for the quarter, excluding special charges, have been revised to $23.3 million and $0.33 per share, compared with a net loss and net loss per share, excluding special charges, of $11.5 million, or $0.16 per share, announced previously.
Revenue for the full year 2000 was revised to $135.7 million, down $19.3 million from revenue of $155.0 million announced on January 18, 2001. The total net loss and net loss per share for the year, excluding special charges, was $78.9 million, or $1.31 per share, compared with the net loss and net loss per share, excluding special charges, of $57.2 million, or $0.95 per share, announced previously.
“I’m pleased with the decisive actions taken by the company,” Hayden said. “Since identifying the problem in late January, a special committee of the Board of Directors has undertaken a thorough investigation, and our independent accountants have completed an audit of our financial statements. To ensure against a repeat of this problem we have instituted new policies and procedures, including those for approving and signing sales contracts.”
Critical Path shares closed down 13 percent at $0.87 Tuesday, near its 52-week low of $0.84 and miles from its $91.81 52-week high.
