24/7 Media trims staff

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The once high-flying ad network and direct marketer 24/7 Media Inc. has hit upon rough times. Last week, CFO Andy Johns resigned after 24/7 Media announced that its fourth-quarter revenues would be lower than previously expected. The company also announced that it would lay off 100 employees, which, when added to the 200 it fired in third quarter 2000, brings its employee base to about 900.

Engage cuts staff to accelerate profits

CMGI-controlled Engage Inc., a main competitor of 24/7 Media Inc., announced late last week that it will lay off half its staff—about 550 employees—as part of a plan to accelerate profitability, reports BtoB sister publication Advertising Age.
The Andover, Mass.-based Internet advertising management company said that the move would make profitability possible by the fourth quarter. The job cuts will take place over the next several months through a combination of layoffs and attrition, Engage officials said.
The company will take a cash charge of about $17 million to $20 million as part of the restructuring, and an additional charge of between $23 million and $25 million in non-cash charges.

The news combined to drive 24/7 Media’s stock down to less than $1 a share, off a 2000 high of $65. And at least one brokerage analyst, Merrill Lynch & Co. Inc.’s Henry Blodget, has suggested that 24/7 Media is now a takeover candidate, substantiating longtime Wall Street rumors. But the fact that it has not yet been snapped up, even at such a cheap price, is telling.

Certainly, 24/7 Media’s woes reflect of the shrinking online ad marketplace. Many of its customers are simply scaling down ad budgets. And it still has strong supporters in the research analyst community. Jim Nail, senior analyst at Forrester Research Inc., said that 24/7 Media’s ongoing diversification beyond the ad network business into providing Internet technologies and direct marketing platforms is shrewd. "They are very viable," Nail said. But he said the company’s biggest challenge will be carrying out its diversification strategy.

Company CEO David Moore’s office off Herald Square is well-lit with expansive views of Manhattan, befitting his optimistic and engaging manner.

Moore is confident about 24/7 Media’s future. "Internet advertising is a real business," he said. "While our stock price is in the tank, and we can’t employ as many people as we used to, the future is very bright." He said that the online ad market will recover. "Right now, online advertising is not in vogue. Twelve months from now, it will be."

In the coming months, the viability of 24/7 Media will depend at least in part on how well Moore’s can-do ethos can rub off on the company itself.

Parts of 24/7 Media’s businesses are thriving. For example, some of its European units are coming into their own, becoming revenue leaders for their New York-based parent. And the company’s Internet direct marketing technologies are gaining converts. Whether this will be enough to rebuild 24/7 Media’s damaged reputation among Wall Streeters remains to be seen.

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