Asiacontent.com, a Hong Kong-headquartered provider of online and advertising solutions to companies such as
L’OREAL, Motorola, SPH Mediaworks and Sun Microsystems, will spin off its Internet Solutions operations in Korea and Taiwan, and shut down those in Singapore, Hong Kong and China.
The restructuring will enable Asiacontent to eliminate operating expenses and leases associated with the Internet Solutions business units – a reduction in overall expenses by more than US$500,000 a month, the company said in a statement. However, it also expects to incur cash expenses in Q3 and Q4 2001 of about US$3.7 million in connection with the spin-offs and closures.
According to chief executive officer Chris Justice, about 75 staff will be affected by the restructuring measures, with those in Taiwan and Korea accounting for a larger proportion of the figure. “The staff in Taiwan and Korea will ‘follow’ the spun-off companies so they will not have lost their jobs as a result of job cuts,” he told asia.internet.com in a telephone interview.
Justice added that the reduction in headcount from 278 in Q2 this year to 104 at last count has been an ongoing exercise aimed at ensuring cost-effective, efficient running of the business. “We’ve been reducing or restructuring operations continually from Q2 onward – that’s why there is a reduction of 174 in headcount, in total,” he said.
The company has already signed in-principle agreements to spin off its Taiwan and Korea business units; the spun-off entities will take over the lease obligations, as well as contracts and certain assets, including staff.
Michael Wu, general manager of Asiacontent’s Internet Solutions in Taiwan, will be responsible for the transfer of company contracts and assets in the country to his new company; while Bryan Lee, country manager of the business unit in Korea, will head a management team that will assume similar responsibilities for effecting the successful spin-off in Korea.
Asiacontent will retain less than 20 percent equity interest in the Taiwan and Korea spin-offs, but will not participate in the management or operations of either business, nor have any continuing financial obligations, the company statement read.
As for the operations in China, Hong Kong and Singapore, Justice said Asiacontent will close them down as soon as the projects undertaken by the various business units have been successfully completed and handed over to clients, or are assigned to a successor company.
“The China operation has finished all contracts,” he said. “Hong Kong still has contracts to complete but they’re working with the clients to hand those [projects] over.”
He added that the Singapore business unit is in the midst of completing remaining contracts of varying lengths, but if it fails to do so within the next several weeks it will assign the outstanding contracts to a successor company headed by current general manager Gerard Lim.
The elimination of its Internet Solutions operations will enable Asiacontent to turn its full attention to its more promising business units – its DoubleClick Media Asia online advertising network and its MTV Asia Online Web sites, joint ventures with DoubleClick, Inc., and MTV Networks.
“The restructuring will allow Asiacontent.com to focus on the DoubleClick Media Asia business. We see the current tough operating environment for online advertising and resulting consolidation amongst competitors as an opportunity to increase our share of Internet advertising and marketing dollars,” Justice said.
“DoubleClick Media Asia is the leading online advertising marketing network with very strong positions in Greater China, Korea and Singapore. We will be growing market share and, at the same time, controlling costs to bring the company to profitability as quickly as possible.”
MTV Asia Online operates the online companion to the MTV channel operations in China, Korea, Taiwan, Southeast Asia and India. “MTV Asia online is a leader in each of its markets and has strong potential by virtue of how well it complements the TV channels,” he added.