Aptimus Restructures Business, Lays Off 120 Employees

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Aptimus Inc. said that it is restructuring its business to reposition itself as a direct marketing infrastructure provider and is focusing all of its resources on its Aptimus Network. As a result, the company laid off 120 people.

The Seattle company also said that it is discontinuing all activities related to its consumer-oriented loyalty and promotion Web sites FreeShop.com, Desteo.com and CatalogSite.com.

"Our network strategy has shown significant promise since its initial launch last August," said Tim Choate, Aptimus's president/CEO. "During this same period, site-based advertising products such as banners, boxes and newsletters have suffered."

The company also said that because of its restructuring it will have to revise its financial projections for the fourth quarter and beyond. This revision most likely will include lowering its revenue projections and its expense expectations. Aptimus delayed its fourth quarter earnings release until March 2.

Aptimus said Feb. 15 that it expects its fourth quarter 2000 revenue to be between $2.2 million and $3.5 million. It also expects a net loss between 31 cents and 41 cents.

However, Choate said that the restructuring should ultimately save Aptimus money. He noted that in the third quarter the company's operating expenses were between $9 million and $10 million. Its core operating expenses are now expected to fall to less than $3 million, he said.

"The network is more profitable for us," Chaote said. "But we're using the same lead generation model. Advertising to attract an audience is an expensive way to go."

The company anticipates that through its reorganization, it can generate about 85 percent of its revenue from lead generation and 15 percent from banner advertising and e-mail marketing services.

Aptimus launched its Aptimus Network in August 2000 and by October grew to more than 100,000 orders per day. The network places offers in front of consumers on high-volume Web sites.

"Keeping the Web sites would slow us down and hold us back," Choate explained. "We now take offers consumer want and put them in front of them wherever they are. We're leveraging other people's audiences and Web sites."

Rather than build its own offer-serving systems to accommodate the growth of the Aptimus Network, the company chose in November to purchase XMarkstheSpot Inc., for $2.5 million in cash and stock. XMarkstheSpot is a provider of pay-for-performance customer acquisition infrastructure services.

Aptimus said it still expects to achieve profitability this year. It noted that it had $25 million in cash and cash equivalents as of December 31, 2000.

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