NEW YORK -- Online community theglobe.com plans to eliminate 59 positions, or 31% or its work force, because of significant declines in the Internet advertising sector and continued wide-spread economic uncertainty.
The company said it will also reduce discretionary spending and contracted services.
The company expects the cost-reduction initiatives to save more than $8 million on an annualized basis and better position it to achieve profitability.
There have been no reductions in the company's nationwide sales force, theglobe said.
TheGlobe (TGLO) has been aggressively targeting traditional brand marketers, attracting a larger percentage of non-dot.com advertisers. The company said the percentage of its non-dot.com advertisers has moved from 55% in the first quarter 2000 to 59% in the fourth quarter of 2000 and 64% in the first quarter of 2001.
Despite a weakening Internet advertising sector, the company plans to still look for online advertising revenue down the road.
"We continue to believe in the long-term staying power of online advertising and are pleased with our sale force's ability to attract an increasing percentage of non-dot.com clients in spite of difficult market conditions," said Chief Executive Chuck Peck.
TheGlobe said it will continue to invest in its core games information properties, including an offline games publication, Computer Games Magazine.
The company said it minimized its cash burn rate to a level that should position it to survive the Internet advertising downturn and jump ahead once the market returns.
In early March, theGlobe projected slower-than-anticipated growth in 2001 as a result of a slowdown in online advertising. The company said then that it was premature to revise its 2001 financial objectives. The company said it hoped to offset the lack of advertising revenue by broadening its revenue base.
In order to do so, the company said at the time that it planned to test market various licensing business initiatives and boost its print-advertising revenue through Computer Games Magazine.
For 2000, TheGlobe posted earnings from operations of $35.3 million, or $1.16 a share, on revenue of $29.9 million.
Copyright (c) 2001 Dow Jones & Company, Inc.