A little more than a week after it watched its skipper flee and swept plans
to merge with SierraCities.com under the carpet, VerticalNet Inc. Thursday
joined the scads of firms opting to lay off workers and reorganize their
businesses.
The vertical market provider gave pink slips to approximately 150 employees,
or 8.3 percent of its full-time workforce. The staff cuts, which
particularly effect sales and marketing staff, will include employees from
some of the 22 acquisitions made by the company over the past two years.
Citing a need to eliminate “redundancies” across the board, new Chief
Executive Officer Mike Hagan said in a company statement that VerticalNet
would focus on growth opportunities within each of its VerticalNet Solutions
and VerticalNet Markets businesses, eliminate acquisition-related
redundancies and reduce costs to reach profitability. This includes closing
redundant sales offices.
The company expects these initiatives to generate savings of approximately
$11 million on an annualized basis and
expects them to result in a one-time charge of approximately $2 to $3
million, or approximately 2 to 3 cents per share, in the first quarter of
2001.
As a silver lining, VerticalNet said its cash position is strong, with
approximately $145 million in cash and other liquid assets on hand.
Hagan said the consolidations will vastly improve the company’s financial
status.
“The changes announced today are part of a clear, aggressive action plan to
focus our strengths on high-potential opportunities within our core business
units, VerticalNet Markets and VerticalNet Solutions,” Hagan said in a press
statement.
The staff cuts and reshuffling comes a week and a half after former CEO
Joseph Galli, also an Amazon.com alum, left the embattled Internet sector
for Newell Rubbermaid Inc. VerticalNet’s stock took a tumble that Jan. 8,
dropping 26 percent.
The company’s stock closed at an even $6 Thursday.
