724 Solutions Inc. Thursday announced an estimated 350 layoffs, though individual employees have yet to be notified.
The cuts will affect all areas and levels of the company, said CEO John Sims, and specific details will be announced in an Oct. 25 conference call for third fiscal quarter earnings (for the period ending Sept. 30).
“It’s not just about cutting people at the bottom of the tier, it’s (also) the manager, director and executive levels. It will affect the vast majority of 724’s offices around the world,” said Sims.
Third fiscal quarter revenues for the Toronto-based Internet infrastructure software company are expected to be $10 million, $5 million below analysts’ estimates. The company itself hasn’t announced Q3 guidance “because we were looking an uncertain (economic) environment,” said Sims.
The company reported second fiscal quarter revenues of $14.1 million and a first quarter of $13.8 million.
Job cuts, a reduced pace in investment and other cash-saving measures are expected to result in an annual cost saving of $65 million to be realized in the first fiscal quarter of 2002.
Sims attributed the cuts to a weakening global economy and falling interest in wireless solutions from key clients, particularly financial institutions. Relatively new technologies such as wireless have become less compelling investments for financial institutions, said Sims. “The solutions that we offer become something that they can take their time with. . . . We expect to see that continue as long the economy continues to be at the level it’s at.”
This is not the first time this year 724 has announced job cuts. In January it acquired Austin, Tex.-based Tantau Software Inc. The integration of the two companies resulted in 90 layoffs.
In the last year 724 has also acquired Spyonit.com and technology from Webhelp Inc. The deals have not significantly affected the company’s cash reserves, said Sims, since they were largely stock transactions. He defended those acquisitions as “absolutely the right thing to do” adding that the skillsets, technology and customer bases 724 acquired with those companies have added to its overall value.