Chinadotcom cuts 400 jobs

In this story: A step closer to profitability More needs to be done RELATED STORIES, SITES

By Kristie Lu Stout
CNN.com Writer

HONG KONG, China (CNN) -- Asian Internet giant Chinadotcom plans to cut 400 jobs and consolidate operations in an attempt to reduce costs.

Chinadotcom will scale back its business in Korea, Singapore, Hong Kong, Shanghai, Taiwan, China, Japan, and the U.S., according to a company press release.

Analysts say the announcement is a move in the right direction, but may not be enough to save the former dotcom high-flyer from its nosedive in earnings.

A step closer to profitability

Earlier this month, Chinadotcom reported lower than expected fourth-quarter revenues at $34.4 million, off from $36.5 million the previous quarter.

The company also warned that revenues would fall at least 25 percent in the current quarter.

"This will be in particular a very difficult quarter," said Chinadotcom CFO Daniel Widdicombe on CNN's Asia Business Morning broadcast.

Taking a step closer to profitability, Chinadotcom will slash its total workforce to 2,000 employees by the end of the second quarter.

The company also says it expects to take charges in the next few quarters related to the reductions.

More needs to be done

Analysts commend the decision, but say even more drastic measures need to be done.

"Four hundred jobs slashed and closing offices is a move in the right direction," says Antonio Tambunan at Deutsche Securities Asia.

"However, I still think a more meaningful move is to shut down non-relevant businesses, like shutting down the portals or spinning them off."

According to Internet research firm Iamasia, Chinadotcom's portal sites attract an audience that is only one-third the size of those of fellow Nasdaq-listed China portals Sohu.com, Sina and Netease each.

The home audience reach of Chinadotcom's portals on the mainland is a mere 17.1 percent.

Chinadotcom has been gradually stepping away from its portal business to focus on its Asia-wide Internet solutions side of the business to drive revenues.

After news of the job cuts and consolidation plan, shares of the Hong Kong-based firm rose 11.2 percent to close at $2.78 on Nasdaq Tuesday.

Alarm bells for Chinadotcom
March 9, 2001
Chinadotcom earnings not up to scratch
March 14, 2001
22.5 million Net users in China
February 19, 2001
Netease reports heavy losses
March 1, 2001
China portal hit by possible delisting
March 12, 2001

Chinadotcom

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.