CyberSource Corp., which announced Nov. 27 that it would close its 30-employee software development group office in St. Louis, said last week that it would eliminate roughly 70 more jobs.
The two cuts, to be completed by March 31, would amount to 36% of the work force at the Mountain View, Calif., company, which provides payment and fraud management services to Web merchants.
Bill McKiernan, CyberSources chairman and chief executive officer, said in the Jan. 2 announcement, While we have made good progress in reducing our expenses during 2002, the completion of a number of key development projects and our efforts to continually streamline operations allowed us to further reduce our expenses for 2002.
Specifically, the company cited efforts to increase processing capacity, improve customer reporting, and introduce a new version of its payment software.
Mr. McKiernan said in the release that the payroll reduction, combined with the consolidation of facilities in Mountain View, should position the company to generate a profit on an EBITDA basis (earnings before interest, taxes, depreciation, and amortization) in the latter part of this year. CyberSource would take a one-time charge for the fourth quarter of 2001 to cover expenses related to the job cuts and the consolidation.
Michael Hutchison, an analyst at Barrington Research in Chicago, said: This move is a step in the right direction for CyberSource. At this point theyre not seeing the top-line growth they had expected, and they really needed to pare expenses to more closely manage the top-line growth.
CyberSource reaffirmed its fourth-quarter-2001 guidance of $7.6 million of revenues and a pro forma loss per share of 22 cents. It will provide exact cost savings and 2002 guidance Jan. 23, when it is to report its 2001 fourth-quarter earnings.
The analysts consensus is that CyberSource will post a per-share loss of 22 cents for the fourth quarter of 2001 and trim that to 13 cents in the fourth quarter of this year. Mr. Hutchison, however, estimates it will cut its loss to 9 cents a share for the fourth quarter of 2002. I think they will at least meet their guidance, and its possible, if they see top-line growth, they may even exceed estimates, he said.
Mr. Hutchison said CyberSources stock has been a stellar performer since August. It reached its 52-week low of 84 cents last year on July 25 and has doubled since then, he said. CyberSource shares closed at $1.83 Friday, up 5.78%.
In an interview Thursday, chief financial officer James Buckley, who is to leave at the end of January, said: When I look at finance, I break it into three areas. Transaction processing, which is sacred. The second element is SEC compliance, and when you get through that youre left with category three opportunities for expense reduction and thats where I found myself.
