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More dot.com bloodletting
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January 4, 2001: 2:49 p.m. ET
Engage and Vault.com are the latest in a long list of companies to cut staff
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NEW YORK (CNNfn) - Engage Inc. and Vault.com Inc. were the latest dot.coms to announce job cuts Thursday, underscoring a downsizing trend that began about eight months ago.
Engage (ENGA: Research, Estimates), which provides Internet marketing software and services, said it will cut 550 jobs, roughly half its work force, to reduce expenses and accelerate its path to profitability.
The Andover, Mass.-based outfit, which is a majority-owned operating companies of Internet incubator CMGI Inc. (CMGI: Research, Estimates), said the job cuts and other operational changes will generate annual improvements in operating margins and cost reductions of about $120 million to $150 million.
The cash impact of job cut charges are expected to be in the range of $17 million to $20 million, Engage said. Non-cash components of the restructuring charges are seen in the range of $23 million-to-$25 million.
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We believe this major restructuring is necessary to enable the company to position itself for future growth and to significantly reduce costs.
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Tony Nuzzo
President, CEO
Engage |
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"We believe this major restructuring is necessary to enable the company to position itself for future growth and to significantly reduce costs," Tony Nuzzo, Engage's president and CEO, said in a statement. "We are creating a fully integrated company with internal dynamics that facilitate more effective communication and decision making."
Last month, Engage turned in a quarterly loss that was wider than Wall Street had expected, which its executives blamed primarily on weakness in the market for online advertising.
Separately, Vault.com, a privately-held career site, said it will lay off about 33 of its 99 employees.
Executives at Vault.com said they decided to cut jobs in order to stay on track to achieve profitability by the end of third quarter. The company, which received about $10 million in financing in late 2000 from a variety of investors including the New York City Investment Fund and Hollinger Capital, said those funds would carry it into the third quarter.
With their announcements, Engage and Vault.com add their names to a growing list of Internet companies that have reduced staff in the face of a slowing U.S. economy.
Last month, a report released by international outplacement firm Challenger Gray & Christmas showed that December marked the seventh consecutive month in which job cuts at Internet companies increased over the previous month.
Engage shares were up 3 cents at $1.16 in afternoon Nasdaq trade. CMGI fell 47 cents to $4.75.
-- from staff and wire reports 
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