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NaviSite Cuts 25 Percent of Workforce

On Tuesday, NaviSite (www.navisite.com) announced it was implementing cost-cutting initiatives that meant cutting 126 employees (or about 25 percent of total staff).

But a company representative said that no one from NaviSite's Streaming Media Group, based in San Diego, is affected. "It's business as usual," said one source. Currently, the Streaming Media Group has 42 employees.

The company said in a statement that the reductions are part of its focus on "delivering high levels of operational excellence to its customers, and continuing to implement more efficient and scalable managed service processes via automation."

As part of the layoffs, NaviSite said seven of 13 vice presidents have departed; in sales, human resources, international, strategic planning, managed services, marketing, and technology planning. Also gone, is the company's general counsel.

Two weeks ago, NaviSite said its president and CEO, Joel Rosen, was resigning. He served as the company leader since April 1999, and will remain a consultant to NaviSite. Trish Gilligan, the company's chief operating officer, was appointed acting CEO.

Speaking about the layoffs, Gilligan said in a statement that the streamlining efforts would help the company focus on "operational excellence and select growth initiatives." "The cost control efforts that we have been implementing are proving successful, and I believe they position NaviSite to weather the current market storm and emerge well positioned to capitalize on the burgeoning managed services market," said Gilligan. "These actions are planned to significantly reduce our cash requirements, which are expected to lower our revenue requirements to become cash flow positive.''

In June, the company said that it had retained investment bank Goldman Sachs to assist looking for "strategic investment alternatives."

In other layoff news, Avid announced it was cutting 140 jobs, and taking a charge of approximately $8 million in the current quarter in connection with the restructuring.

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