TMCnet News
Synacor slashing 20 percent of its jobs [The Buffalo News, N.Y.](Buffalo News (NY) Via Acquire Media NewsEdge) Sept. 30--Synacor Inc., which has been losing money since last spring, said it is cutting about 70 jobs, or roughly 20 percent of its work force as the Buffalo Internet content providers grapples with a steady decline in its sales. "These are difficult decisions that, regrettably, affect talented people," said Himesh Bhise, Synacor's chief executive officer, in a statement. "However, becoming leaner and more agile strengthens Synacor and serves as the foundation for a broader strategic agenda to return the company to growth." The cuts are likely to have a significant impact on Synacor's workforce in Buffalo, which includes about 350 employees at its downtown headquarters. It also would deliver a blow to the Buffalo Niagara region's already undersized technology sector, where Synacor is one of the biggest players, along with information technology services provider Computer Task Group. The job cuts, which took place Tuesday, come as Synacor's business has been struggling since last year. Its sales, which hit a record high of $122 million in 2012, fell by 8 percent last year and have continued dropping this year, declining by 13 percent through the first half of 2014. Synacor has said it expects its sales this year to fall to between $100 million and $103 million. Synacor's business took a further hit when executives disclosed during an August conference call that the company will lose a key revenue source when one of its biggest customers, Charter Communications, takes the operation of its web start page in-house by the end of March. While Synacor executives said they have signed an amended agreement with Charter that gives the company the chance to provide the cable television company additional products and services, the loss of the start-page business leaves a gaping hole in Synacor's revenue stream that analysts estimate at more than $10 million, or more than 10 percent of the company's expected 2014 sales. Further adding to the pressure on Synacor's executives, a pair of dissident investors -- investment firms JEC Capital Partners and Ratio Capital Management -- urged the company last month to make deep cuts in its expenses to help make the Buffalo Internet content provider profitable again. The dissident investors said Synacor should slash its annual expenses by $17 million to $19 million, or more than 15 percent. The disgruntled shareholders said they were pushing for deep cost cuts because Synacor has been burning through its cash at a rate of $20 million over the last two years as its sales have declined because of weakness in its main business of designing and operating web start pages for its customers, mainly big cable television and electronics companies. The dissident investors said they expect Synacor's sales to fall to $90 million to $95 million next year. Without any expense reductions, they predicted that the company would lose between $9 million and $12 million. Synacor's dissident shareholders have been urging the company's directors since June to put the company up for sale. They also opposed Synacor's efforts to hire a successor to its retiring CEO, Ronald N. Frankel -- a search that ended last month with the hiring of Bhise, a former Comcast executive. They also are seeking two seats on Synacor's board of directors and have offered to pay the expenses associated with a special shareholders meeting that would consider the removal of the company's chairman, Jordan A. Levy, and another longtime director, Andrew M. Kau, from the board. Bhise's hiring came just before Synacor reported a $1.9 million loss during the second quarter. The earnings report indicated that Synacor's business weakened on almost all fronts, with lower revenues, fewer visitors to the websites it runs for its customers, fewer search queries through those websites and less clicks on the advertisements on those pages. Bhise said in early August that he would take 45 days to develop a strategic plan for the company, which is hoping to bring in new revenues from products that it is developing to allow consumers to sign into and access its customers' content on a wide range of mobile devices. That 45-day window ended in mid-September. Scott Bailey, Synacor's chief operations officer and one of its four highest-ranking executives, previously said he would leave the company at the end of September. Synacor's stock, which went public in February 2012 at $5 a share, has since lost more than 60 percent of its value. The shares rose 5 cents to close at $1.91 on Tuesday, before the company made its announcement. email: [email protected] ___ (c)2014 The Buffalo News (Buffalo, N.Y.) Visit The Buffalo News (Buffalo, N.Y.) at www.buffalonews.com Distributed by MCT Information Services |