Open Market Inc., an early entrant into the electronic-commerce market, is now struggling to reclaim its edge. The company said yesterday that it will undergo a restructuring that will include laying off 20% of its workforce. The vendor currently employs 480 people.
The announcement follows the disappointing third-quarter earnings report released on Thursday under which the Burlington, Mass., company posted a loss of 19 cents per share and a 7% decline in revenue. Open Market pointed at falling CD-ROM-based software sales, losses in the Asia-Pacific rim, and shortcomings in its sales organization as reasons for disappointing results. "There are a lot of things we can place the blame on," a company spokesman said, "but Japan and Asia are certainly on the top of that list."
Allen Bonde, an analyst with the Extraprise Group who has followed Open Market for several years, says the cutbacks were no surprise. "The writing's been on the wall for a few quarters. They're in the fastest-growing market, but they're out of sync with what people want from E-commerce. They're coming out with the actual infrastucture packages and what the customers want are more services." Still, Bonde sees hope for Open Market. "If they have a shake-up in management or a partner bring in an outside perspective, they could figure out a way to be profitable."
For its third quarter, Open Market's revenue fell to $14.4 million, down from $15.5 million last year. Net losses increased year over year for the quarter: $6.6 million this year vs. $6.4 million last year. The company is expecting a restructuring charge of $2 million to $4 million dollars in the fourth quarter.