American Greetings Hands Pink Slips to 1,500 Employees
The Cleveland company posted the loss after recording the write-down of its $33 million investment in Egreetings Network Inc., an Internet greetings service, and a one-time tax reserve of $176 million.
Rising competition from the Internet and lower-priced cards from competitors such as Hallmark Cards Inc. have forced the company to lower its fiscal 2002 earnings to between $1.10 and $1.20 a share before nonrecurring charges.
"Anticipated changes in certain contractual relationships with strategic partners related to the corporation's Internet business will result in an unexpected pre-tax, non-cash charge of about $18 million," the company said in a statement.
"The company expects these forthcoming contractual changes, coupled with recent acquisitions and organic growth that have made AmericanGreeting.com one of the top 15 most-visited Web sites in the world, to ensure that the online business reaches profitability during the fourth calendar quarter of 2001," the statement said.