Excite@home trims staff

(Telephony) Excite@Home, an Internet service and content provider, reduced its staff by 8 percent yesterday, laying off about 250 workers.

Most of the staff reductions will come from Excite@Home’s media and content development area, with some general cuts in corporate functions. The company will also close small offices in Seattle and Austin, Texas, according to the Excite@Home spokeswoman.

With the online advertising market drying up, it’s no surprise most of the cuts come from the media and content development side of Excite@Home.

“They are cutting most of the people from the media or portal site, but it’s not because they are debating whether it’s a useful entity to own, it’s more because that business has slowed down significantly,” said Abhishek Gami, Internet analyst with William Blair.

The spokeswoman said that media remains an important part of Excite@Home’s strategy and that they are streamlining the media business. The layoffs are about aligning the cost-structure with revenue expectations.

The job cuts will not affect the cable high-speed Internet service offered by Excite@Home.

“The cuts don’t impact our residential and commercial ISP products and don’t impact our network operations and engineering,” said the Excite@Home spokeswoman.

“It streamlines the business. It’s great to keep on growing as fast you can especially when the revenues keep flowing in and the market’s great, but when things slow down and you’ve been in this fast growth mentality I think you lose site of what you are all about. Why is the company in existence and how can you focus to become the best there is in the industry?” Gami said.

Gami doesn’t expect Excite@Home to be profitable until the first quarter of next year and this might speed them a little faster toward profitability.

“They cut expenses where they thought the revenues were not going to flow as fast. I’ll bet you by the second half of this year, if the Internet ad market recovers the way we think it will and the business does start to grow again, they will start to hire more people again. They had to press the reset button to get themselves back to be inline with the kind of revenue growth they are expecting,” Gami said.

Gami has Excite@Home’s Consumer Broadband area slated to grow over 100 percent this year in his revenue model with Corporate Services expanding about 90 – 100 percent. Excite@Home’s media growth rate will be at a less than 10 percent this year, according to Gami.

Excite@Home ended 2000 with 2.95 million customers, attaining its fourth-quarter goal of 25% to 30% growth in its worldwide broadband subscriber base.

Excite@Home will release its fourth-quarter earnings on Thursday and is expected to provide its 2001 outlook.