(LSE:BLZ) will be cutting 10% of its workforce or around 60 jobs, the company announced today.
The company blamed the need for cutbacks on the protracted telecommunications slowdown and the prevailing uncertainty in its industry.
CEO Eli Reifman said that to reduce uncertainty and gratuitous suffering among the company's workers, Emblaze would carry out the process as fast as possible. The cuts start today and end tomorrow.
Today Emblaze has over 500 workers, after hiring about 300 from 2001. Jobs will be cut at all levels, including managers. Most will be at the company's biggest business line, E-Sys, which produces hardware infrastructure solutions and software to transit media over cellular networks, selling to phone companies.
"Although about 40 field trials and joint work with about 100 operators around the world continue to advance successfully, Emblaze's management sees a possibility to cut costs by outsourcing and working with strategic partners, such as the global companies Logica, Microsoft, and others," Reifman explained.
Some of the savings will be routed toward expanding the workforce of the company's three other business lines Emblaze Semiconductors, Orca Interactive and AlphaCell Wireless, which offer higher sales potential in the short run.
The cutbacks will save costs without affecting the company's income potential, Reifman said.
Emblaze will support the people it dismisses with inflated compensation, assistance in finding new work, extending their use of company cars and cellphones, and access to the company's computer system, it said.
For 2001 Emblaze reported revenue of only $9 million, compared with $31 million in 2000 and a forecast that it would generate $60 million revenue in 2001.
Technically, Emblaze reported $23 million revenue for 2001, but of that $15 million was generated by selling licenses to its affiliate AlphaCell which it fully acquired after the date of its balance sheet.
The company also reported a $42 million operating loss, compared with $4 million operating loss in 2000.
Since its IPO on the London Stock Exchange, in which Emblaze (then Geo Interactive) raised $400 million, the company has brought in considerable income from interest. In 2000 that income totaled $27 million, dropping to $16.6 million in 2001.
The company ended 2001 on a loss of $29 million, compared with netting $12 million in 2000 thanks to its financing income. The company's cash and equivalents stood at $350 million at year-end 2001, while its market cap today stands at $175 million.