Internet media company RealNetworks Inc. on Thursday joined the list of technology companies to slash its workforce to lower costs, by
announcing 140 job cuts, resulting in a third quarter charge of
$4-$5 million.
The cuts represent 15 percent of an overall workforce of
approximately 950. RealNetworks said it will also reduce
significant amounts of discretionary spending as well.
RealNetworks' stock price slipped slightly in after hours
trade on Instinet to $7.66 from $7.83 at the Nasdaq close on
Thursday. Over the last year, the stock has traded from a high of
$53.375 to a low of $5.
The Seattle-based company, which makes the RealPlayer
software for playing audio and video on a personal computer,
said these measures were accompanied by no change in the
financial guidance offered during its second quarter earnings
release on July 17.
"After we adjust our cost structure, it's absolutely our
intent to resume our track record of pro forma profitability and
positive cash flow," said Rob Glaser, chairman and chief
executive of RealNetworks.
RealNetworks spokesman Eric Liu said the job cuts would take
effect immediately, touching across all areas of the company. He
said the company was offering between six and 15 weeks of
severance to the affected employees and health insurance through
October.
RealNetworks earlier this month posted quarterly profits and
revenues that missed Wall Street expectations as it struggled
with weak demand for its core systems products and a sluggish
advertising market.
RealNetworks then cautioned its third quarter revenues would
be weaker than the second, when revenues fell by nearly 25
percent to $47.9 million from $62.7 million a year earlier.
For the second quarter, RealNetworks' pro forma net earnings,
which exclude $27.2 million in acquisition, real estate and
investment charges, plunged by 77 percent to $2.4 million, or 1
cent per diluted share, compared with $10.6 million, or 6 cents a
share, a year earlier.
Liu said the company remained bullish on its future, citing
its new infrastructure software, its GoldPass subscription
service and MusicNet, an online music subscription service the
company is launching along with three major record labels.
Several analysts remain upbeat on the company, noting the
projected brisk demand for high-quality video and audio on the
Internet.
"Real like everyone else has been having their share of
problems plus they're in the notorious position of having
Microsoft Corp. as their only main competitor," said
Aram Sinnreich, analyst with Jupiter Communications Inc.
