NetZero cuts staff 26%

August 2, 2001 Posted: 1108 GMT

LOS ANGELES (Reuters) -- NetZero Inc., which built its name by providing no-charge Internet access, has cut 26 percent of its work force and put additional limitations on its free services.

The company also announced that it had sold its RocketCash unit, which had provided online payment services, to an unidentified buyer for an unidentified price.

Liz Gengl, a spokeswoman for the Westlake Village, Calif.-based company said no further information was available on the terms of that deal or on whether the job reductions, which took effect this week, would involve charges against earnings.

NetZero said it had laid off 66 employees in six of its U.S. locations and that 27 workers had moved with the RocketCash unit to its new owner. Those two moves combined to take the company's total work force from 363 to 270, Gengl said.

The company also said it will begin giving users 10 hours of free Internet access per month, down from the previous limit of 40 hours, a retreat from the model of purely advertising-supported Web access.

Users who exceed NetZero's new 10-hour free limit will be offered either a month of unlimited access for $9.95 on the ad-supported service, or a more traditional subscription-based service for the same monthly rate, the company said.

NetZero's free service will no longer be offered in certain outlying areas where high telecommunications costs make the free offering cost prohibitive, the company added.

NetZero said it had about 3.4 million subscribers in June, including 210,000 paid subscribers. During June, about 30 percent of those using its free service accessed the Internet for more than the new 10-hour limit, the company said.

The changes in service terms will take effect Oct. 1. NetZero stock ended flat at 60 cents Wednesday. The stock touched $36.38 in January 2000 and have lost 98 percent of their value since, taking the company's market capitalization to about $75 million.

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