Quokka Sports (Nasdaq: QKKA) was up 6 U.S. cents at 25 cents in early trading Tuesday after the online sports companysaid it would restructure its operations, letting go 59 percent of its369-person workforce and taking a $1 million charge to first-quarterresults.
San Francisco, California-based Quokka said it will focus on its mainbusiness of live sports-event coverage, setting up its technologyinfrastructure business as a separate unit.
Quokka said that the newstructure should “considerably” reduce the company’s operating loss and cut itscash-burn rate by more than 65 percent, to less than $2 million per month.
“The current financial challenges faced by all media companies in theInternet marketplace today make it necessary for us to diversify ourbusiness model beyond sponsorship, content syndication and consumerrevenues,” said president and chief executive officer Alvaro Saralegui.
The job cuts are the second round of layoffs for the company. In December, Quokka slashed 90 jobs and took a $1.8 million to $2 million charge to fourth-quarter results.
Quokka’s core media business includes the Golf.com Web site, as well ascoverage of the Olympics, college basketball, Major League Baseball, the BTGlobal Challenge around-the-world sailing race, and MountainZone adventuresports.
The company said it reached more than 4 million sports fans in the quarterended in December, and will focus on those events that have the “strongestfinancial potential.”
During the first quarter, the company will produce events including the PGATour’s Southern Swing golf tournaments on Golf.com, the Men’s and Women’sDivision I NCAA basketball championship tournaments on FinalFour.net, andongoing coverage of the BT Global Challenge on BTGlobalchallenge.com.
“Our new model will allow us to expand our event opportunities and pursuenew business that in the past we have been unable to accommodate, such aslive event coverage for third parties,” Quokka senior vice president Tom Newell said. “With more flexibilityin the way we monetize our coverage of events, we will be able to continueto provide state of the art sports entertainment coverage while decreasingcosts.”
As a separate business unit, the company’s technology division will providemanaged services for companies needing to create content for the Internet,broadband, interactive TV and wireless platforms.