Foster City, Calif.—QuinStreet Inc., an online vertical marketing company, plans to cut about 80% of Ziff Davis Enterprise employees in the wake of its acquisition of the tech media company, according to accounts by former ZDE employees. The total job cuts may approach 100 over the next several months.
One industry observer, who spoke on condition of anonymity, said of the job cuts, “It's a bloodbath.”
QuinStreet acquired ZDE's database as well as brands such as Baseline and eWeek. A QuinStreet spokesperson declined to comment specifically on the company's plans but issued the following statement: “We are very excited about Ziff Davis Enterprise and the addition of great brands and editorial talent to our b-to-b efforts. We are pleased to provide these folks and assets a digital home and business model that works, and on which we can all expand into the future.”
Steve Weitzner, ZDE's CEO, will be leaving the company. He declined to speak with BtoB
beyond saying, “There is a bunch of very talented people who will not be going to QuinStreet.”
Industry observers said acquisitions with high numbers of job losses can create integration problems. “When a company buys another company, it also has a plan to save money—here, and here, and here—and cutting employees is often a part of that. But when you cut 100 out of 120 jobs, that's really over-the-top,” an industry observer said.
Other observers said the content brands may be difficult to maintain with a reduced number of employees, which in turn may weaken the ZDE database at the heart of the deal.
“You have to invest in the database, you need to keep it up-to-date,” said Ed Fitzelle, managing director at Whitestone Communications, who said top-notch content sites are usually critical to building and maintaining databases for lead-generation purposes.
Still other observers said that it is unlikely QuinStreet paid a high price for the assets of ZDE, which was owned by a consortium of lenders, including GE Capital. QuinStreet moved into the b-to-b technology lead-generation sector with earlier acquisitions of Internet.com and IT Business Edge.
“QuinStreet will monetize that [ZDE] database through lead generation,” said another industry observer, who spoke on condition of anonymity. “They've been developing that vertical for a while, so they already have some editorial assets. They're just downsizing and rationalizing Ziff Davis Enterprise, and they'll find a way to keep that database going.”