Art Technology Group this week said it will lay off about 20 percent of its workforce, or about 200 employees, as part of structural reorganization that realigns the company's worldwide sales and service structure.
In a written statement Monday, the Java-based e-business platform and applications vendor, based here, said it would fall short of anticipated financial results for the second quarter of fiscal 2001. ATG plans to report its second-quarter results on July 26.
In the statement, ATG CEO Jeet Singh said the developer was forced to reduce its workforce to cut costs and to facilitate the reorganization.
"The workforce reduction will substantially lower ATG's overall cost structure," said Singh. "Operationally, the reorganization will allow us to maintain product quality and superior customer support, while creating a tighter and flatter organization for ATG and greatly enhancing our productivity."
Singh said an anticipated rebound in customer IT spending failed to materialize during the quarter.
"In the first quarter, many of our customers shut down their IT budgets and delayed purchasing decisions," Singh said in the statement. "We anticipated that we would begin to experience a gradual return to normalcy in the following quarters. However, in the second quarter, many customer budgets were significantly reduced or continued to be very restricted."
ATG expects to report second-quarter 2001 revenue in the range of $34 million to $35 million, compared with revenue of $33.6 million in the second quarter of 2000 and $42.8 million in the first quarter of 2001.
ATG said it will incur a $40 million restructuring charge and a loss, excluding that charge, in the range of 17 cents per share to 19 cents per share. This compares with net income per share of 4 cents it reported for the second quarter of 2000 and a loss per share of 19 cents in the first quarter of 2001, according to the company. ATG's loss including the restructuring charge will be in the range of 61 cents per share to 63 cents per share.
As part of its reorganization, Singh said ATG plans to combine its sales and services organizations under former IBM executive Bernard Bailey, now senior vice president of global field operations for ATG. Meanwhile, Lauren Kelley will move to the newly created position of senior vice president, strategic development, overseeing ATG's partner and distribution strategy, Singh said.
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