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Network Commerce, Inc. (Nasdaq: NWKC) rose 3/32 to 1 1/4 Friday after the company announced a restructuring plan intended to help it post a pro forma profit ahead of schedule.
The Seattle, Washington-based company, which operates online marketplaces and offers hosting services, said "continued strong business growth," along with cost savings from the restructuring, will enable it to reach profitability on a pro forma basis in fewer than 10 months.
The restructuring, which includes the layoffs of 85 people, will save about US$40 million in 2001. The job cuts affected workers at all the company's locations. In addition, the closing in January 2001 of HagginGroup, an unprofitable offline direct marketing unit of the company, will result in 56 additional layoffs, Network Commerce said.
As a result of the restructuring, Network Commerce said it now expects a pro forma loss of about $15 million for 2001, compared with a previous forecast for a $27 million loss. The company also expects a pro forma profit in the third quarter of 2001, one quarter ahead of previous expectations. Pro forma revenue for 2001 will be about $150 million.
"Continued strong growth, decreased expenses and the efficient restructuring of the company are three keys for us to reach profitability earlier than previously expected," said chairman and chief executive officer Dwayne Walker.
The company said it plans to cut marketing expenses, capital spending, and contractor and professional fees next year, as it continues to focus on providing technology infrastructure, domain registration and hosting, online marketing services and commerce networks for the Internet and wireless networks.
Also Friday, Network Commerce said that Alan Koslow, its chief financial officer and general counsel, will leave the company at the end of January. Stephen Smith, recently named vice president of finance, will serve as interim CFO while a search for a permanent successor is underway.
Koslow, who helped take the company public, said he is leaving to spend more
time with his family and "pursue another business opportunity."
