Jun 15, 2001 12:00 PM,

Geoworks cuts staff and products

By Lynnette Luna, Telephony

Mobile data software and services provider Geoworks this week revised downward its revenue guidance and announced plans to restructure the company.

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The restructuring includes 43 layoffs, the discontinuation of the company’s mobile application service provider business and the consolidation of Geoworks’ AirBoss and Premium Servers businesses into one group with a merged sales and marketing effort.

“Given current market conditions and our available resources, we believe it is imperative to focus our efforts in the area of greatest current potential while reducing operating expenses,” said David Grannan, CEO of Geoworks. “We believe our greatest opportunity is targeting the enterprise though the wireless carrier.”

Cingular Wireless is using Geoworks’ AirBoss application platform, a suite of client/server products and consulting services that provides wireless access to corporate data, as the foundation for enterprise mobile application development throughout its wireless data network.

Geoworks said eliminating the mobile ASP business and integrating its product lines will result in significant cost savings for the company. Geoworks expects revenue for the first fiscal quarter ended June 30 to be between $3 million and $3.4 million, below initial expectations of $3.9 million to $4.4 million.

“Given the lack of visibility in the mobile data space and the apparent lack of commitment to the service on the part of Geoworks’ customers, we are not surprised that the company is eliminating the mobile ASP business,” wrote UBS Warburg analysts in a recent note.

UBS Warburg believes Geoworks must obtain more financing before the end of this year to alleviate concerns about liquidity. According to the firm, Geoworks has $13 million in cash and securities and will likely burn $5 million in the June quarter and $4 million the following quarter, ending the year with less than $10 million in cash.

“We note that the cost cutting associated with the organization will help bolster its balance sheet,” said UBS Warburg.