On2.com Cuts 40 Percent of Staff
On2.com (www.on2.com) announced on Tuesday that it is cutting 40 percent of its staff in a wide range of departments. In a conference call, the company said that it was undertaking this restructuring in order to breakeven on third quarter EBITDA for 2001.
On2 cut 52 jobs in Los Angeles, San Francisco, Albany, NY, and New York City. Part of the reduction comes as a result of consolidation with its recent acquisition of Eight Cylinders Studios. The cuts are primarily in general and administrative, finance, marketing, sales and business development and are expected to reduce operating costs by an estimated $10 million annually.
"Our shareholders and the market have made it eminently clear to us and other companies in our industry that they will not tolerate significant losses and businesses that cannot be self-gestating," said Douglas A. McIntyre, president and CEO of On2. "It is our plan to sustain the strong new business growth rates we have seen in late Q4 2000 and anticipate in early Q1 2001, which includes growth from our core encoding business and licensing of our software to other companies."
On2 first cut jobs early in 2000, when it announced it was no longer focusing on providing content and would instead concentrate on products and services, including its proprietary video codec.
For the quarter ending September 30, 2000, On2 reported a loss of approximately $6 million on revenues of $289,750 or $.024 basic and diluted loss per net share. On2's stock closed Wednesday down 6.25% at $.060/share.
On2's Founder and CTO, Dan Miller, believes that the companies new narrowband offering, VPX, will potentially help fuel the companies path to profitability.
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