Internet B2B and B2C promotions firm Promotions.com said Wednesday it will reduce its workforce of 180 by about 13 percent in a restructuring move to cut costs.
The company said it will reorganize its units, and its 150 remaining employees, along product lines.
Its outsourced B2B promotion platform and implementation team will fall under Promotions.com’s Custom Solutions division.
The company also runs a consumer Web site, Webstakes.com, which is essentially a consumer promotions portal that houses clients’ sweepstakes, and which will be organized into its own division.
“We have rededicated our resources to eliminate duplication and improve communication to better serve the needs of our clients,” said chairman and chief executive officer Steven Krein.
“We believe a more focused and streamlined operating model will maximize the return on our clients’ promotion dollars and build upon our leadership position as the Internet promotion experts.”
Though it expects to incur a one-time restructuring charge of $500,000 to $1 million in the fourth quarter, Promotions.com said the move ultimately will help the company’s bottom line, placing annual operating savings between $3 million to $3.5 million.
Last week, Promotions.com announced preliminary third quarter revenue estimates, predicting a loss of 41 to 46 cents per share.
While the company might beat estimates for the quarter — Wall Street predicted a loss of 43 cents — the recent announcements suggests Promotions.com is taking steps to offset effects of the online ad spending crunch.
The drop-off of dot-com ad money hit the entire industry hard, with companies like ValueClick and Avenue A missing earnings estimates, and other online marketing companies — like industry giant DoubleClick — seeing their market valuation tumble more than 70 percent off its 52-week high.
At the time of its earnings estimates revision, Promotions.com said its potential shortcomings were due to a lessening number of promotions based on Webstakes.com.
At press time, shares of PRMO were trading at $1.72, down about 5 percent from Tuesday’s close of $1.81 — and a distant cry from the company’s 52-week high of $35.
