Earthnoise explains that change of core business prompted top execs to resign

Scorning rumors of financial straits, company cites recent $2.25m funding round
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Video-applications service company

Earthnoise

has fired half its workers in the last couple of months, TheMarker.com has learned. But it firmly denies teetering on the brink of collapse.

At its peak, Earthnoise employed 60 people. Today it has 32 working in Israel and the United States. In October 2000 the company announced the establishment of a creative division at its New York offices. But its days were short-numbered. Most of the division's workers have been sent home.

Earthnoise CEO David H. Steward, formerly CEO of TV Guide, and other senior officials, have left the company. Earthnoise explains that it's all due to reorganization. The company says it has shifted focus from private consumers to providing technology and services, requiring lay-offs from the creative and the sales and marketing divisions. The new focus prompted top officials originating from the private-consumer arena to leave, as they no longer suited the company's new direction. The company said that it has not nominated anyone in Steward's place.

Earthnoise strenuously denies rumors that it is in dire financial straits. On the contrary, it notes that a month ago it secured $2.25 million from

Israel Seed Partners

and AOL-Time Warner, it says, adding that it is recruiting marketing and salespersons for its U.S. branch and is looking for staff to replace the senior positions that have become available.

Earthnoise was established in June 1999 by President Elan Dekel, CTO Doron Friedman, VP of Product Development Adam J. Siegel, VP of User Experience Amnon Dekel, and VP of Internet Technologies Shai Peretz. The team developed earthnoise.com as a basis for the first video community on the Web. Its company's technology enabled users to load video films onto the Web.

Today, after reorganization, the company streams video to end-users via ISPs, ASPs and online wireless service providers. Earthnoise products enable customers to make, edit and distribute video films in various formats over Internet and wireless networks.