InfoUSA Slashes Jobs Amid Financial Turmoil

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InfoUSA laid off more employees from its Database America division last week and has fired more than 250 workers, or roughly 14 percent of its work force, across all divisions since starting a cost-cutting purge over the summer that has coincided with high turnover in the data provider's executive suite and a freefall of its stock.


Rick Puckett resigned as chief financial officer on Sept. 30 and was replaced on a temporary basis by Gautam Gupta on Oct. 8 as the Omaha, NE, company conducts a search for its third CFO since July. That same day, infoUSA dismissed PriceWatershouseCoopers as its auditor, citing independence requirements, and has since named KPMG Peat Marwick as its replacement.


The company's stock dipped to a 52-week low of 2 5/8 shortly after the latest set of announcements and is down 12 points since July. It closed Oct. 14 at 4 5/8. InfoUSA, which previously warned that it will miss third-quarter earnings expectations because of shortfalls in its large business division, has pushed back its earnings release from Oct. 20 to Oct. 28.


InfoUSA chairman/CEO Vin Gupta -- no relation to Gautam Gupta -- said the layoffs were necessary to stem costs and were expected after the company's acquisition of list firms Walter Karl and JAMI Marketing earlier this year. He would not comment on whether further layoffs were planned.


"We are cutting our personnel to be more efficient," Gupta said. "We had planned to make those cuts when we made those acquisitions but we did not make deep enough cuts as we should have."


While Gupta and Database America president Al Ambrosino attribute the cuts to a buildup of personnel earlier this year combined with soft third-quarter results, a source in the infoUSA corporate offices blamed the cuts on salespeople not meeting their numbers.


Gupta played down the resignation of Puckett as he did the departures of former CFO Steven Purcell, CEO Scott Danhke and COO Jon Wellman over the last three and a half months. Gupta said Puckett was only the acting CFO and not experienced enough to hold the position on a permanent basis. Puckett wasn't described as the interim or acting CFO when his appointment was announced July 31.


Gupta also denied that plans to build an eastern headquarters for Database America and Walter Karl in Montebello, NY, had been scuttled and said infoUSA has no immediate plans to take any strategic action that would prop up its sagging stock. Julie Springer, a spokeswoman for Experian, Orange, CA, denied a report that infoUSA was being considered for acquisition while Jacques Kerrest, CFO of Harte-Hanks, San Antonio, TX, said it's not company policy to comment about merger speculation.


While Gupta expects the personnel cuts to make infoUSA more efficient, the quality of work is said to have suffered in a number of areas and prices have increased. Chris Middings, who held sales and communications positions at the Lead Sheet, Burlington, VT, which was bought by infoUSA (then American Business Information) in 1996 and folded into the database compilation group in Omaha this year, said its operational budget was cut leading to a downgrade in data quality and delays in filling orders. The Lead Sheet had compiled new small business listings.


In his new position with Response Marketing Group, Burlington, VT, Middings said the sales force at infoUSA hasn't returned calls to its toll-free number for new business lead orders. He added that prices for leads had increased from three to 18 times what the Lead Sheet had charged while USPS' ZIP plus 4 deliverability rates had dropped from 95 percent to 85 percent.


A current Database America employee who requested anonymity said his department has been prohibited from using executive search firms to hire personnel, which has led to overbearing work loads, delays and poor quality control.
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