MyPoints.com, Inc. (Nasdaq: MYPT) lost more than half its value in the first few minutes of trading Friday, falling 2 7/8 to 2 after the company announced an expected third-quarter loss and a reorganization that includes job cuts.
MyPoints, a San Francisco, California-based company that operates online customer loyalty programs, said it expects a pro forma loss before items for the quarter of $14 million to $16 million, or 39 to 45 cents per share, on revenue of $13.5 million to $14.5 million. Analysts were expecting a loss of 28 cents per share.
A year earlier, the company lost $8.3 million, or 40 cents per share.
MyPoints has 15 million-plus members, and provides advertisers with e-mail and Web-related advertising products. Like other companies that depend on Internet advertising and marketing, MyPoints was hurt by an industry-wide slowdown in spending in the third quarter. Still, according to chairman and chief executive officer Steve Markowitz, the company continued to grow membership and added new shopping partners and leading names to its client roster.
“While sales picked up in September, they were not strong enough to offset the weakness of the prior two months and prevailing market conditions,” Markowitz said.
MyPoints also said it laid off 120 employees, or 29 percent of its workforce. The job cuts, necessitated by the company’s August acquisition of CyberGold, mainly covered technology, production and administrative jobs, MyPoints said.
The reorganization will save about $8 million, or 20 cents per share, each year, the company said. “While a reduction in workforce is always difficult, it was a necessary part of the integration of the two companies and ensures our competitiveness in the current environment,” said Markowitz.
MyPoints said it has about $120 million in cash, cash equivalents and short-term investments, enough to “grow and achieve profitability.” The company plans to report third quarter results November 2nd.
Merrill Lynch reportedly downgraded MyPoints to neutral from buy following the announcement.