E-com software maker eliminates 80 US jobs

Struggling electronic commerce software maker Intershop Communications will eliminate 80 positions in the US, about 30% of its US workforce.

          Struggling electronic commerce software maker Intershop Communications will eliminate 80 positions in the US, about 30% of its US workforce.

          Spokesman Heiner Schaumann said this week he could not clarify whether current employees would be laid off or whether the positions would be eliminated by attrition.

          "I really have nothing more to add to that," he says. "We won't have more exact information until January 31," which is when Intershop is due to release final financial data for the fourth quarter and fiscal year 2000.

          The company has seen its stock plummet since revising its projected fourth quarter results downward on January 1. Its shares on Germany's Neuer Markt stood at 9.99 euros ($US9.51) in late afternoon trading Monday, a gain of some 12% over the previous close, but still more than 90% off last year's high of 140.36 euros.

          Intershop's position in the US is seen as particularly weak, despite heavy investment in its US operations.

          "We have got a mixed impression on this announcement because in the end what Intershop needs is to improve their sales in the US in particular, more a forward strategy than looking back and cutting costs," says an analyst at UBS Warburg in Frankfurt. "They had built up inefficient operations in the US and now they are scaling back."

          Intershop, founded in the eastern German city of Jena in 1992, opened a San Francisco headquarters in 1996, with a view to tapping into the mainstream of Silicon Valley trends. Research and development are still centered in Jena, while the company's financial headquarters is in Hamburg.

          "We have got the impression that they will cut US staff in everything that's not sales-centric, so maybe cutting general administration, while directing the whole company out of Hamburg or out of Jena. The question is how you can really drive a global company with all the other operations driven out of the European offices," says the UBS Warburg analyst. "They have to show now over the next three or six months that they will improve their sales force in the US."

          The poor performance of Intershop, which long was held up as a success story for Germany's New Economy and for the revitalisation of the formerly communist East, has sent ripples through the country's technology industry.

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