Aug, 2001 : Theglobe.com Cuts Staff, Hosting Interest

📅 August 6, 2001 - Reflecting the continued significant decline in theInternet advertising sector, theglobe.com announced Friday aggressivecost-reduction and restructuring initiatives aimed at preserving capital,including layoffs of half the staff and shutting down its hosting arm.

The company, which houses a popular online community, is closing itsbusiness theglobe.com and its small-business Web hosting propertywebjump.com effective August 15, and is significantly scaling down itsonline games operations. These actions have resulted in the elimination of60 positions, or 49% of the Company's workforce.
Theglobe.com's management team says it is aggressively seeking businesscombination or asset sale opportunities for the Company's games informationproperties, including online content properties Happy Puppy, Kids Domain,Games Domain/Console Domain, Computer Games Online, and Chips & Bits,distributor of games and related products into the retail and wholesalechannels, as well as leading print publication Computer Games Magazine.theglobe.com will entertain all bids for these games properties during thenext few months.
Theglobe.com has also terminated the long-term lease obligation for its NewYork City headquarters facility and will relocate to a smaller facility inmid-August. As a result of these actions, the Company expects to incur asignificant restructuring charge in the third quarter of 2001 (endingSeptember 30, 2001) reflecting employee severance, and property, plant andequipment and goodwill write-offs.
"Over the past twelve months, we have taken aggressive steps to positiontheglobe.com for a turnaround or business combination dependant on a reboundin the online advertising sector, but the sector remains severely depressedand there are few signs of a rebound in the near-term," said Chuck Peck, CEOof theglobe.com in a statement. "During this prolonged difficult businessenvironment, our priority is to drastically reduce our cash burn rate andpreserve the Company's capital resources while our senior management teamaggressively seeks synergistic business combination."
"The decision to discontinue our community operations, which contributedisproportionately to our operating losses, allows our senior managementteam to focus solely on theglobe.com's core strength - games," continuedPeck. "Our games information properties that comprise games.theglobe.comhave developed into valuable world-leading brands by successfully amassinghighly targeted international audiences of gamers of all ages and levels ofexperience."
Peck said the company's online games information network consistently ranksin the top three in its category based on audience size, and Computer GamesMagazine, which recently celebrated its 10 year anniversary, now has one ofthe highest circulations in its category.
"We continue to believe in the long-term power of online advertising andlike several leading industry analysts, we believe that the current spendingslump is a temporary pause in market's overall growth. In fact, we haveexperienced an increased level of sales bookings during July," Peckcontinued. "However, we are not in a position to sustain our online businessoperations in the long term."