InterTrust Cuts Staff, Hires Financial Adviser

Digital Rights Management company InterTrust Technologies eliminated 85 of its 184 employees last week in response to lower-than-expected licensing revenues in the fourth quarter. InterTrust president David Lockwood explained that, while the company is convinced DRM will play an important role in "trusted computing," the broad adoption of the technology is "still in the distance." The latest staff cut is the fourth time InterTrust has reduced its payroll within the last year; three previous layoffs eliminated a total of 260 jobs. Because the company is uncertain how long it will take before it can "monetize" its intellectual property assets, it has hired the investment banking firm Allen & Co. to explore strategic alternatives.

For the fourth quarter, licensing revenues rose to $1.6 million from $1.4 million, but total revenues fell to $1.8 million from $2.9 million. For the full year, licensing revenues rose 46.5%, to $6.1 million, and total revenues were up 5.5% to $8.4 million. The net loss for the year was $115.5 million, compared to $55.6 million in 2000.

InterTrust has also announced that it has filed an "interference" claim with the U.S. Patent Office, alleging that two recently issued Microsoft trusted computing operating system patents were originally invented by InterTrust in 1995–1996. Last April, InterTrust filed a lawsuit against Microsoft charging the company with patent infringement.