Asian Internet leader rescales; Expects US$50 million in annualized cost savings
Hong Kong, May 18, 2001
[Hong Kong, May 18, 2001] chinadotcom corporation (NASDAQ: CHINA) today announced a rescaling of its business in a strong push to be the first major Internet company in Asia to achieve breakeven performance.
Management is lowering the hurdle to achieve breakeven performance by reducing its costs by an expected US$50 million, or more than 60%, on an annualized basis. The steps to implement this rescaling include new management assignments, a corporate headquarters downsizing, company-wide staff reductions and other budgetary cost cuts. Additionally, new revenue initiatives will accelerate the company's path to profitability and will secure its position as the leading Asian Internet company.
"We have been making corrections since last year to align our costs, but these moves are much bolder and more aggressive to get us to breakeven as soon as possible," said Peter Yip, CEO of chinadotcom. "We are taking decisive action now to become leaner to reflect economic realities."
Staff reductions are being made across the board. Accelerating previously announced reductions, the company will trim overall staff levels from 2,100 to well below 2,000 by the end of Q2. The Hong Kong corporate headquarters will be streamlined and made more cost-efficient. The company's overall budget for marketing spending and general expense areas will be reduced. Overall office space costs will be reduced through office consolidations in multiple locations.
"Through this rescaling we expect to realize savings of over US$50M annualized," noted CFO Daniel Widdicombe. "Given the current and projected Internet economy, we need to create a healthier size and structure to capitalize on the changed competitive landscape both from an operational and an acquisition standpoint."
Senior management and organizational changes, including a strong performance-based compensation program, mark additional changes chinadotcom is making to improve efficiencies and focus on core business improvement.
chinadotcom Board Chairman Raymond Ch'ien has been named Executive Chairman and will bring a closer focus of his executive management talent on the company's operations. In a drive to make core businesses more efficient, Peter Hamilton, COO of chinadotcom and CEO/co-founder of recently re-branded Ion Global, will focus executive leadership on the operations of the company's Ion Global e-solutions unit and e-marketing unit. Departing Ion Global president Steve McKay will continue to contribute as a member of Ion Global's recently announced Leadership Council. Jon Winslow will move up to become COO of Ion Global.
The company is extending its commitment to China and is assigning Jack Lin, the company's Chief Investment Officer and Senior Vice President, Strategy, the responsibility for portal operations improvement and synergy development between the operating units.
Another initiative to reduce losses is to close under-performing offices and business lines in both core and non-core areas. The company will exit the advertising network business in Japan, for example, and has closed or sold other under-performing offices and subsidiary businesses.
chinadotcom will continue to drive revenues through greater synergies among its core businesses of e-solutions, e-marketing and media assets. A key growth market is China, and the company will stress cross-selling and utilization of resources across key client projects in high-growth, high-margin areas including e-commerce, SCM and ERP implementations. e-marketing services and technologies continue to grow in key markets. The company's profitable consumer portal hongkong.com will further its growth strategy through subscription services, travel services and Integrated media platforms, offering new cross-marketing opportunities and revenue streams.
"We are extremely well-placed geographically to take advantage of our current holdings and diversified revenue base," said Executive Chairman Raymond Ch'ien. "With a healthy cost basis putting us on a sustainable track we can demonstrate to shareholders and clients that we're the best Internet solution for their investment."
About chinadotcom corporation
chinadotcom corporation (NASDAQ: CHINA; Website: www.corp.china.com) is a leading integrated Internet company offering e-business solutions, portal and e-marketing services. Through its three-dimensional business model, chinadotcom provides a full range of Internet services around the world that; 1) build e-business strategies and solutions (chinadotcom e-solutions), 2) distribute content via its portal network (chinadotcom media assets), and 3) sell services through online marketing (chinadotcom e-marketing).
The company and its subsidiaries have offices in 10 markets, including Japan, Korea, Australia, Mainland China, Hong Kong, Taiwan, Singapore, Malaysia, Thailand, the UK and the US. For more information about chinadotcom corporation, please visit www.corp.china.com
Safe Harbor Statement
The statements in this news release, other than the historical financial information, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ from anticipated results. Further information on risk factors that could affect chinadotcom corporation's results of operations is detailed in its registration statements and annual reports as filed with the United States Securities and Exchange Commission.
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