WebMediaBrands Inc.– the MediaBistro and Internet.com parent-company better known by its former name, Jupitermedia — laid off 60 employees yesterday. That’s about 25% of WebMediaBrand’s workforce.
Everyone else gets a 5% pay cut.
In a memo we’ve obtained, CEO and founder Alan Meckler shares these specifics on WebMediaBrands’ business:
- We have witnessed firsthand the huge decline in revenue with the Mediabistro job board numbers. This powerful and vibrant business used to run paid listings for 200 plus jobs a day. Presently the number is significantly lower.
- Advertising, the lifeblood of Internet.com, has declined markedly in the recent quarter.
- Event registrations have been weakening. Our biggest gain has been in the online “learn” area and in overall traffic growth across all of our communities (Graphics.com, Internet.com and Mediabistro).
Here’s the full memo:
From: Alan Meckler
Sent: Tuesday, March 03, 2009 10:19 PM
Subject: State Of The Company
Today was a difficult day in the history of the company. I know you are aware that today we terminated the employment of 60 employees. It’s a difficulty we all share with the loss of our friends and coworkers. In addition, as certain services transition to Getty, a few other employees will also leave us in the near term; those employees have been notified. We are now a company of approximately 165 people. While the decision to downsize was difficult personally and professionally, I believe it was necessary and now leaves us in a reasonably sound business position.
Relatively speaking our company is in good shape now that we have shed the images division. The company now has no bank debt and has a reasonably strong cash position. However, overall we are losing money on operations due to the state of the economy.
Unfortunately, we all know that both our country and the world are facing a deep recession verging on depression. Influential investor Warren Buffett stated this past weekend that he believes the economy will worsen in 2009. While there is no formal definition of a depression, I believe that a recession becomes a depression once a recession has lasted three years. The present recession is now about 15 months old, but it appears to be getting stronger. I am not an economist, but I have run companies since 1971 and I have lived through some tough economic times. I know better than anyone that my most important job as CEO is to preserve cash and plan for the worst. The worst scenario, of course, would be a recession lasting at least another 18 months or more.
Specifics on our business: we have witnessed firsthand the huge decline in revenue with the Mediabistro job board numbers. This powerful and vibrant business used to run paid listings for 200 plus jobs a day. Presently the number is significantly lower. Advertising, the lifeblood of Internet.com, has declined markedly in the recent quarter. Event registrations have been weakening. Our biggest gain has been in the online “learn” area and in overall traffic growth across all of our communities (Graphics.com, Internet.com and Mediabistro). Growth in traffic bodes well for the company. Once the economy turns neutral and then positive, greater traffic will equal big revenue growth.
Despite many negatives, I am very optimistic about our future if we can preserve working capital. A few weeks ago, I personally purchased 1.3 million shares of our common stock and hope to purchase more in coming weeks. I share this information with you to assure you that I believe the company has a bright future.
Future success will come with hard work and some sacrifice. The first order of business is to make sure that our company has working capital while it faces declining revenue. If we have working capital, we can survive this troubled time as we wait for the economy to improve and for us to grow again. (There will be a day again when the job board is running more than 200 paid job listings.) While I cannot make any guarantees, my plan is to try to make sure that we do not endure further layoffs.
In order to preserve working capital and avoid going deeper with any job cuts at this time, we are implementing a salary reduction for all employees hired prior to February 2009 as follows: Starting with the second pay period in March, all employee salaries will be reduced by 1 per cent per month over the next 5 months (for a 5% reduction). At that point, I will assess our economic position and determine if it will be necessary to extend the reduction period for an additional 5 months (for a total of a 10% salary reduction). I understand deeply that this plan will be difficult for everyone involved. I have intentionally structured it so that it will be a shared sacrifice and so that it will happen gradually in order for employees to plan accordingly for this gradual change rather than feeling the effects in one pay period. If at any time the business climate shows improvement or even less deterioration, we will cease the cuts and put a plan in place to restore cut amounts in an orderly fashion. While there are no guarantees of result, we are currently working on several new exciting initiatives that I believe will be beneficial to the company including, a new freelance Web site, more ?learn? opportunities, and new Mediabistro style events.
I will send an email about the state of the company every first working day of each month so that all employees are informed about where we are as a company and where things stand with the payroll reduction.
I want to add that I believe in the talent pool at WebMediaBrands and I want to foster an environment of creative growth and possibility in your careers here. As a sign of this dedication, I have made plans to issue stock options to all employees (pending approval of the compensation committee of the Board) in March. In time, if our plans bear fruit and the company grows again, our stock price should improve, and these options could become very valuable. After board approval, we will explain the option process in greater detail upon grant.
My sincere thanks for your valuable contributions each day.
Alan M. Meckler
Chairman and Chief Executive Officer
Disclosure: Nicholas Carlson used to write for InternetNews.com, a Jupitermedia property.
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