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Intershop Announces U.S. Layoffs

By Lori Enos
Jan 16, 2001 11:03 AM PT

Just two weeks after lowering its fourth quarter earnings estimates, e-commerce software company Intershop Communications AG (Nasdaq: ISHP) announced Monday the elimination about 80 positions within its U.S.-based operations as part of a corporate restructuring.

Intershop Announces U.S. Layoffs

Intershop also plans to consolidate several global functions to streamline operations and enable the U.S. organization to focus on "expanding domestic sales, consulting and other revenue-generating activities," the company said.

"We are determined to create global efficiencies and accelerate return to profitability," Intershop chief executive officer Stephan Schambach said. "The U.S. market is an integral part of our global growth strategy, and this reorganization will enable us to better target enterprise sales, gain greater penetration in key markets and expand our network of strategic partners."

Details to Follow

The layoffs, which are effective immediately, represent approximately 30 percent of the company's U.S. workforce. The Hamburg, Germany-based company bases its U.S. headquarters in San Francisco, California and has operations in New York City, Denver, Colorado; Chicago, Illinois; Charlotte, North Carolina; and Alexandria, Virginia.

The company did not provide additional details of the restructuring, but said more information would be forthcoming when it reports its financial results for fiscal year 2000 on January 31st.

Lowered Expectations

The layoffs came after the company late in December lowered its fourth quarter revenue estimates to between US$26.3 million and $28.3 million, below its earlier forecast of between $37.6 million and $47 million.

Intershop expects a net loss for the quarter of between $28.3 million and $30.2 million, or 34 cents to 36 cents per share.

After announcing its lowered expectations, Intershop saw its stock plummet from $15.50 at the close of business on December 29th to a low of $3.50 on January 3rd. However, following news of the layoffs, the company's stock had risen from $4.50 at close of market Friday to $4.75 in Tuesday morning trading.

More Bad News

Layoffs, falling stock prices and lowered expectations are not the only problems dogging Intershop. On January 9th, rival e-commerce software provider Open Market (Nasdaq: OMKT) filed a patent infringement suit against the company in U.S. District Court in Delaware.

The suit alleges that Intershop's software products infringe upon three of Open Market's patents, one for an "Internet Server Access Control and Monitoring System" and two "Network Sales System" patents.

Open Market is seeking both injunctive relief and unspecified damages.

New Year's Purge

The first few weeks of 2001 have seen a host of dot-coms, including B2B support players, announce layoffs or shut their virtual doors. On January 4th, e-commerce transactions services company CyberSource announced it was restructuring its operations and laying off about 90 employees.

Other dot-com layoffs this month have come from eToys, which announced it was laying off 70 percent of its U.S. workforce and shutting down its eToys Europe operation, as well as Vault.com, Listen.com, eMusic, Kozmo and MVP.com.

Companies shutting down this month include group buying site Mercata, online music company Musicmaker.com, and the German-language version of financial site Motley Fool.


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