WorldGate Axes 60 Employees4/04/2001 5:06 PM Eastern
WorldGate Communications Inc. announced late Wednesday that it laid off 60
employees, or 20 percent of its work force.
The layoffs came on a day when WorldGate stock hit a 52-week low of $2.69 per
share before closing at $2.90.
WorldGate CEO Hal Krisbergh said the company made the cuts in order to live
up to promises it made to Wall Street that the company would reach cash-flow
breakeven next year.
The company expects to slash $10 million annually from its balance sheet as a
result of the cuts, Krisbergh said. Employees from all areas of the company were
affected, although no one at the vice president level was let go, he added.
WorldGate's market capitalization has plummeted 85 percent from more than
$450 million in October 1999 to $66.8 million at Wednesday's market close. Most
of the company's market cap consists of cash.
WorldGate received a boost last summer when it formed the TVGateway
interactive-program-guide consortium with Adelphia Communications Corp., Charter
Communications Inc., Comcast Corp. and Cox Communications Inc. The MSOs invested
in WorldGate and said they would use the TVGateway IPG to bring competition to a
market that is dominated by Gemstar-TV Guide International Inc.
But Comcast and Charter recently signed long-term deals with Gemstar to offer
TV Guide Interactive to the majority of their subscribers.
The WorldGate layoffs follow recent significant cuts at RespondTV Inc. and
Commerce.TV Corp. RespondTV cut 25 percent of its work force last Friday,
following the layoff of 30 employees at Commerce.TV.