In announcing an almost US$12 million quarterly loss last week, Infoseek said it was taking a $7.4 million "restructuring charge" for the period. That charge became clearer Wednesday when the directory service closed its corporate-market push-media division and handed about 15 employees their walking papers.
The short-lived Corporate Information Division came into being in early February as a PointCast-like service that would transmit content directly to subscribers. In May, however, a new president - Harry Motro, formerly of CNN Interactive - took control of Infoseek with a mandate to run a tighter ship, and by last month it was decided the Corporate Information Division would die.
"What Harry is trying to do is figure out our strategic direction for going forward," said Infoseek vice president Tom Browne, who currently serves as the company's acting chief financial officer. "Harry's about a month away from articulating that direction, but clearly the CID isn't part of it."
The news apparently came as something of a surprise to the division's workers. A source told Wired News that the employees were clearing out their desks in Alexandria, Virginia, on Wednesday morning, "and don't seem too happy about it."
Browne said Infoseek has offered new positions to most of the workers, but that only "a couple" seem prepared to pull up stakes and relocate to the Santa Clara, California, headquarters. The Corporate Information Division was based in Virginia, he noted, because "the person who ran the division had a lot of contacts, and they were all local."
"I wouldn't call this a layoff," Browne added. "I'd call it a refocusing of our strategy."
That strategy has been in flux for months, ever since Infoseek decided to focus on business-oriented Net users and concede the general-interest directory business to the likes of Yahoo. Despite the company's second-quarter loss, it claimed approximately 8 million daily pageviews in June, and more traffic than rivals Lycos and AltaVista.
"What they're doing is refocusing on their core area," Bruce Smith, an analyst at Merrill Lynch, said of Wednesday's closure. "This was outside their core." He added that the move will make Infoseek more competitive, and thus more attractive to investors.
Browne said the Corporate Information Division was originally intended to give the company a footing in the burgeoning market for push-type services, but "in the end, we just thought we didn't want to participate in it."
Closure of the Corporate Information Division accounts for a hefty chunk of that $7.4 million restructuring charge. "There's other pieces in there, like severance packages for some executives," Browne observed. "But the CID is a big piece."
For the quarter ended on 30 June, Infoseek reported revenues of $7.7 million, up 134 percent from a year earlier. Without the one-time restructuring charge, the company would have seen a net loss for the quarter of $4.6 million.
