NBCi, the Peacock’s Internet wing, will lay off 20% of its staff as part of a planned restructuring compounded by disappointing second quarter results and a stock price that is almost $100 off its one-year high.
A total of 170 positions will be eliminated by the end of the year; staff is currently 850. The pinkslips come in the wake of a June announcement that NBCi wanted to merge its divergent broadband and narrowband portals into one unified network — a move that hinted at cost-cutting measures to come.
Roger Maes, director of investor relations for the company, said the majority of layoffs will be in San Francisco, where the Netco is based. Maes said that the pain will be spread equally and no particular division of the company will be specially targeted.
“We’re in the midst of some cost-cutting initiatives,” Maes told Daily Variety. “We’ll always be evaluating the bottom line.”
NBCi spokesman Robert Silverman said no formal hiring freeze has been instituted and that the company still plans to go through with a fall launch of the unified Web site, which will incorporate the Snap.com, Xoom.com and recently acquired Flyswat.com and AllBusiness.com.
The layoffs “will keep our business healthy,” Silverman said.
The most recent earnings report comes on top of a string of bad news for NBCi.
Although the company beat analysts’ expectations, it still lost $49.5 million in the second quarter compared to $24.9 million for the same period in 1999. Net loss came on the heels of a profit warning for the rest of the year from the company, which resulted in analysts across the board downgrading the stock.
Company’s stock remained unchanged Tuesday at $11, although news of the layoffs broke after the market had been closed for several hours. The 52-week trading high was reached in January when the stock price hit $106.13.
Even with a grounded stock price, having a corporate parent with deep pockets may be NBCi’s saving grace. Silverman said the company has $680 million in the bank thanks to its affiliation with the Peacock, which owns almost 50% of the Netco. NBCi expects to become profitable in 2002.