Intraware Restructures, Cuts Staff

In an effort to reduce operating costs and reach profitability by year's end, E-services company Intraware Inc. has sold its software reseller business and is laying off about 65 employees, reducing its head count to 120.

Intraware will divide its operations into two units: SubscribeNet online software delivery, which lets vendors sell software to customers via electronic downloads instead of on CD-ROMs; and its IT-asset-management business, which it got last year when it acquired Janus Technologies Inc. The IT-asset-management business recently landed two new customers in Computer Associates, which will resell Intraware's proprietary asset management software, and Corporate Software, which bought Intraware's software reseller business.

Intraware also revealed Wednesday that CFO Don Freed is leaving the company. Wendy Nieto, Intraware's controller, will become VP of finance and assume responsibility for the company's finances.

For the first quarter of 2001, ended May 31, Intraware's loss, before interest, taxes, depreciation, amortization and other noncash charges, was $1.8 million, or 6 cents per share, compared with an EBITDA loss of $9.4 million, or 37 cents per share, for the same quarter last year. When it released its first-quarter financial report in June 2000, Intraware forecast an EBITDA loss of 6 to 9 cents for the second quarter, which ends Aug. 31. Although Intraware is a public company, it's seeking private equity investments to help strengthen its balance sheet, president Frost Prioleau says. So far this year, Prioleau says, the company has raised $8.5 million in funding, and one more round of funding should help the company reach profitability.

Intraware is going back to basics with this restructuring, says Geoffrey Bock, a senior consultant with the Patricia Seybold Group. "Intraware is returning to its core competencies of electronic software distribution and helping companies to manage their electronic assets," he says. "By focusing on the stuff Intraware claims to do well, they will test the validity of their business model."