SAN FRANCISCO — MarketWatch.com Inc. announced Wednesday it is laying off about 15 percent of its work force, making the popular online business news site the latest media outlet to shrivel in the face of an advertising slump.
MarketWatch’s cutbacks translate into the loss of about 40 jobs from its 250-employee payroll. The layoffs, coupled with other expense reductions, will save the company about $9 million annually.
In trading Wednesday on the Nasdaq Stock Market, MarketWatch’s shares fell 14 cents to close at $2.76, well below its January 1999 initial public offering price of $17. The stock peaked at $130 shortly after its IPO.
Like many other Internet companies, San Francisco-based MarketWatch is struggling to become profitable at the same time that its main revenue source – advertising – is drying up.
Advertising accounted for 65 percent of MarketWatch’s $54 million in revenue last year. After losing $91 million in 2000, MarketWatch opened the first quarter of this year with a $20 million loss as the company’s advertising revenue plunged by 41 percent from the prior year.
“As painful as this process is, we believe that we will emerge stronger and more agile to meet the challenges this market presents,” MarketWatch CEO Larry Kramer said. Kramer reiterated the company’s goal of breaking even by the end of this year.
Even highly profitable media giants, ranging from newspaper companies to TV networks, are jettisoning workers to offset the loss of advertising from once-flush dot-com start-ups and free-spending technology companies that fed on the Internet boom.
The wide-ranging media cutbacks have raised concerns that news coverage will suffer, a worry that may also hound MarketWatch as it battles in the highly competitive field of online journalism.
“Clearly, they are not going to be able to do as much as they have in the past,” said industry analyst Michael Legg of Jefferies & Co. “They are going to have to focus on the key components of the business.”
Kramer said MarketWatch remained committed to high-quality journalism. About 85 of MarketWatch’s employees cover the news.
Although MarketWatch is relatively small, the company quickly established a high profile by hiring well-known market commentators and capitalizing on its ties to CBS.
In addition to owning a 34 percent stake in MarketWatch, CBS has provided the Web site with free advertising and programming space on its television and radio stations. Through Dec. 31, CBS had provided MarketWatch with advertising valued at $38.5 million. MarketWatch will receive an additional $21.5 million in advertising from CBS through May 2002.
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