Excite@Home to Lay Off 380 EmployeesAfter a first quarter that saw Excite@Home lose nearly $1 billion, the company on April 30 announced a work force reduction of 380 employees, or 13 percent, marking the second round of cutbacks for the company this year. The firm, a high-speed Internet access provider and Web portal operator, trimmed 8 percent of its work force in January.
With this round of cuts, the Redwood City, CA-based company now has 2,180 employees.
The work force reduction came a week after the resignation of chairman/CEO George Bell, who quit after the company reported a first-quarter net loss of $832.6 million, or $2.05 per share, on revenue of $142.8 million. In the year-ago period, the company reported a net loss of $676.5 million, or $1.75 per share, on revenue of $169 million.
Bell was replaced by Patti Hart, former president/CEO of broadband telecommunications provider Telocity Inc.
Excite@Home blamed its problems on the weak advertising market and recently lowered its earnings expectations for 2001. The company said the cutbacks affected all of its divisions but are weighted more heavily toward its media operations.
The company reported that in the first quarter, its media revenue -- comprising mainly fees for advertising and sponsorships on its Web and broadcast media properties and revenue generated by its MatchLogic subsidiary -- fell 41 percent to $45.1 million. Excite@Home laid the blame for that deficit squarely at the feet of the declining online advertising market.
Analysts said they were not surprised by Excite@Home's numbers, given the current state of the media business.
"We think the narrowband media business will remain walking wounded (or dead as in the instance of competitors such as Go.com given Disney's decision to remove life support) and that Internet advertising will not revive until there is critical mass of high-speed customers to support rich media advertising and more broadband content," Matthew Harrigan, an analyst at Janco Partners Inc., said in a recent report.
The analysts noted that Excite@Home is wise to concentrate on the broadband side of its business and less on the media side. The hiring of Hart points to the company's willingness to emphasize broadband over media, they said.
"New chairman and CEO Patti Hart is likely to further focus on [the company's] high-speed access business, given her background as president of Sprint long distance and CEO of DSL provider Telocity," Harrigan said.