MicroStrategy cuts workforce for second time in 2001

For the second time since April, business intelligence software vendor MicroStrategy Inc. has cut its workforce in an effort to cut expenses and brace itself for uncertain economic times.

In an announcement yesterday, the company said it is cutting 15% to 20% of its global workforce -- between 175 and 200 workers -- as it works to achieve profitability in its core businesses by the end of the year.

Spokesman Marc Brailov said the McLean, Va.-based company made the announcement in a filing with the U.S. Securities and Exchange Commission.

The layoffs took effect last Friday and were across all departments, Brailov said. Most were in the U.S. and largely affected sales, administration and marketing employees. Brailov couldn't estimate how many U.S. workers would lose their jobs compared with workers in other offices around the world.

MicroStrategy will be left with about 800 workers, Brailov said, down from an estimated 1,900 as of last December.

The cuts follow a round of layoffs in April, when 600 jobs were slashed as the company began to focus on its core business intelligence applications (see story).

MicroStrategy has been staggering economically since it was forced to restate earnings for both 1998 and 1999 early last year (see story). MicroStrategy lost $261.3 million in 2000.

The latest round of cuts is expected to save the company between $16 million and $25 million per year.

Brailov said the weakening economy was a "major impetus" for the additional cuts but added that the move is also a proactive step to handle any further degradation of the economy.

MicroStrategy's chairman and CEO, Michael J. Saylor, said in a statement that the company is "firmly committed to achieving our previously stated goal of becoming profitable in our core business by year-end. We believe the best way to serve our customers is to manage our business profitably, even in a recessionary environment."

Ron Exler, an analyst at Robert Frances Group Inc. in Westport, Conn., said MicroStrategy has been hit by the same economic problems many technology companies have been facing as the economy and corporate technology purchases have slowed.

"It looks like they cut a lot of people, but they were one of those companies that possibly were overburdened" with some unnecessary workers, Exler said.

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Copyright © 2001 IDG Communications, Inc.

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