Autobytel Announces Workforce Reduction
EDITR'S NOTE: The world is in an economic slump as a result of the DotCom bust. The bust happened because there were just too many idiotic IPO/DotCom companies with no history of success or chance of achieving success. They sucked up billions of investor dollars, and then paid out unrealistic salaries to inexperienced employees (which in turn fueled the housing boom and later the housing crash when millions were thrown into unemployment or under-paying jobs under-paying compared to the previous unrealistic salaries - and they couldn't afford their mortgage payments).
Among these idiotic DotCom companies were eToys.com, furniture.com, garden.com, intervu.com, quokka.com, autoweb.com, and of course autobytel.com. After years of pissing away hundreds of millions in search of a workable business model comes word that Autobytel is cutting 75 people from their workforce, about 35%. That means that as of Friday morning, before announcing the staff reduction, Autobytel had about 225 people working for them. Two hundred twenty five employees for a company that has never been profitable in approximately 15 years of business...and keep in mind that there were staff reductions in the past. It sends chills through my body when I think how large their overhead must have been at it's highest. Shortly after the company went public in the 1990s they had a market cap over $1 billion. Today it is less than $50 million, and if I recall correctly, ABTL went through at least one reverse stock split.
The current CEO says the company is now poised for profitability, a wishful prediction uttered continuously by his numerous predecessors. While Autobytel may have a short-term illusion of profitability, I can't think of one reason why they would enjoy success for any long term period. It takes more than just emulating The Auto Channel business model to be successful.
Autobytel has retained a bank firm to help explore and evaluate strategic alternatives
to maximize shareholder value. I think the proper strategic alternative would be to take
whatever money is left in the company's bank account and distribute it among the shareholders
before it's all gone.
Marc J. Rauch
IRVINE, Calif., Sept. 26, 2008 - As part of a company-wide cost-cutting initiative started last year, Autobytel Inc. today announced it has eliminated an additional 75 positions, or approximately 35% percent of its workforce. These reductions reinforce management’s previously announced commitment to improve cash flow and attain profitability.
Autobytel anticipates saving approximately $10 million annually as the result of the workforce reduction and the elimination of certain other expenses. The company expects to record a charge related to severance and other employee-related costs totaling approximately $2.2 million over the third and fourth quarters of 2008.
“As we navigate through this challenging economy, we are taking all the necessary and proactive, though sometimes difficult, steps to further reduce costs. We believe that at the end of this process we will have a leaner, more focused company, right-sized to compete in the current economic climate,” said president and chief executive officer of Autobytel, Jim Riesenbach. “While it is never easy to make a change of this magnitude, we believe our actions are necessary to bring the company more closely in line with our goals of reaching cash flow breakeven and achieving profitability. During the past year, we made significant progress improving efficiencies in the revenue-generating areas of our business while maintaining a strong cash position and balance sheet, and believe we can continue to build and sustain our revenue streams while delivering outstanding service and value to our clients, even with a reduced workforce.”
Concurrently, Autobytel announced that it has retained investment banking firm RBC Capital Markets Corporation as its financial advisor to assist the company in exploring and evaluating strategic alternatives to maximize shareholder value.
The company said such alternatives are designed to strengthen Autobytel’s marketplace position and could include the possible sale of the company or certain of its assets, acquisitions, or strategic partnerships. The company also said there can be no assurances that the process will result in any specific transaction or transactions and that it does not intend to disclose developments regarding the process unless and until its board of directors approves a definitive transaction.
“We believe our current stock price as well as overall market conditions are conducive to, and have driven, increased interest in Autobytel from various third parties,” Riesenbach said. “As a result, we have retained RBC Capital Markets, a leading investment banking firm with extensive experience in the internet media space, to more fully evaluate available alternatives and their potential impact on our business. We stand ready to take whatever action is necessary to maximize shareholder value.”