Engage, Inc. (Nasdaq: ENGA) picked up 0.06 to 1.19 Thursday after thecompany, which provides online marketing software and interactive mediaservices, said it will lay off half its employees in a move to cut costs.
Engage said it plans to integrate its businesses and operating units into a”single, cohesive organization,” with an increased focus on software. Thesoftware division has higher gross margins than the company’s otherbusinesses.
The company will consolidate its offices, moving the headquarters of itsmedia division from San Francisco to its Andover, Massachusetts base.The media business will also renegotiate agreements with some ofits network Web sites to increase the percentage of revenue retained by thecompany.
The goal is to break even on a cash earnings basis by the end of fiscal2001, the company said.
Engage said the job cuts will take place over the next several months, with550 positions being eliminated through a combination of layoffs andattrition.
The restructuring will save US$120 million to $150 million per year once theplan is in place, the company said. In the meantime, it will result innon-cash restructuring charges of $23 million to $25 million.
The “cashimpact” of the restructuring will be $17 million to $20 million, the companyadded.
“We believe this major restructuring is necessary to enable the company toposition itself for future growth and to significantly reduce costs,” saidpresident and chief executive officer Tony Nuzzo. “We are creating a fullyintegrated company with internal dynamics that facilitate more effectivecommunication and decision-making.”