Network Commerce, Inc. (Nasdaq:NWKC) rose 3/32 to 1 1/4 Friday after the company announced a restructuringplan intended to help it post a pro forma profit ahead of schedule.
The Seattle, Washington-based company, which operates online marketplaces and offershosting services, said “continued strong business growth,” along with costsavings from the restructuring, will enable it to reach profitability on apro forma basis in fewer than 10 months.
The restructuring, which includes the layoffs of 85 people, will save aboutUS$40 million in 2001. The job cuts affected workers at all the company’slocations. In addition, the closing in January 2001 of HagginGroup, an unprofitable offlinedirect marketing unit of the company, will result in 56 additionallayoffs, Network Commerce said.
As a result of the restructuring, Network Commerce said it now expects a proforma loss of about $15 million for 2001, compared with a previous forecastfor a $27 million loss. The company also expects a pro forma profit in thethird quarter of 2001, one quarter ahead of previous expectations. Pro formarevenue for 2001 will be about $150 million.
“Continued strong growth, decreased expenses and the efficient restructuringof the company are three keys for us to reach profitability earlier thanpreviously expected,” said chairman and chief executive officer DwayneWalker.
The company said it plans to cut marketing expenses, capital spending, andcontractor and professional fees next year, as it continues to focus onproviding technology infrastructure, domain registration and hosting, onlinemarketing services and commerce networks for the Internet and wirelessnetworks.
Also Friday, Network Commerce said that Alan Koslow, its chief financial officer andgeneral counsel, will leave the company at the end of January. StephenSmith, recently named vice president of finance, will serve as interim CFOwhile a search for a permanent successor is underway.
Koslow, who helped take the company public, said he is leaving to spend moretime with his family and “pursue another business opportunity.”