Hungry Minds Restructures
Calvin Reid -- 1/29/01
Offices Closed, 130 Fired
Despite earlier denials of possible layoffs, Hungry Minds Inc., formerly IDG Books Worldwide, announced plans to close selected offices and lay off about 130 employees around the country, in an effort to revive the company's flagging Internet and book publishing operations. Hungry Minds is also reducing its previously announced earnings estimates for fiscal year 2001 from 50 cents a share down to 10 cents a share.
Company officials said the layoffs and office closings will save Hungry Minds about $10 million immediately and as much as $16 million annually. Officials blamed the need for cost-cutting measures on declining revenues from its Internet operations--noting in particular lagging advertising and licensing sales, as well as a writedown of assets connected with the $5-million August 2000 acquisition of the Hungry Minds.com Web site. Officials also pointed to weak results in its computer book publishing operation and a generally poor book retailing climate.
"Overall market conditions cannot support the previously deployed level of online investment that we expected would be subsidized by our core general user computer book publishing business," said John J. Kilcullen, chairman and CEO of Hungry Minds.
Before the layoffs, the company had approximately 700 employees. A spokesperson for Hungry Minds declined to specify whether the layoffs were concentrated in the Internet operations and said only that layoffs would be spread across the company. The company is closing offices in San Francisco, Chicago and Foster City, Calif. Some positions will be shifted to offices in Indianapolis and the corporate headquarters in New York City.
Kilcullen said the company will refocus its operations on its core computer book publishing business and its most heavily trafficked Web sites. Kilcullen said the book publishing operations would "focus on the growth areas of Web programming and design, networking, certification and emerging technologies, including wireless." The reemphasis on its core book operations will result in a 10% reduction in new titles across all the publishing groups, and the company will focus on titles that are selling best in the current market and on strong backlist titles.
Bill Barry, president and COO of Hungry Minds, ech d Kilcullen: "Consolidation will allow us to improve efficiencies and reduce the expense of operating multiple sites." The company also said it plans to implement a new inventory management process and will reduce "overall inventory investment."
Volume 247 Issue 5 01/29/2001