LifeMinders Drops CEO, Wireless Unit

  |  January 30, 2001   |  Comments

Following worse-than-expected earnings, the online direct marketer is banking that a major overhaul will expedite profitability.

As part of a significant overhaul, email and wireless marketer LifeMinders has hired a new chief executive and chairman, following the resignation of founder Stephen Chapin, Jr. on worse-than-expected performance for 2000.

Taking Chapin's place as CEO and chairman will be board member Jonathan Bulkeley. Bulkeley, who has served on LifeMinders' Board since August 1999, previously served as the CEO of BarnesandNoble.com, and held a number of positions at America Online, including vice president of business development and managing director of AOL UK.

"In just two years, Steve has created and built one of the most respected online direct marketing companies. Our enviable position includes a database with over 21 million members, a scaleable direct marketing infrastructure and a cash and marketable securities balance of approximately $63 million," Bulkeley said. "I am fortunate to be able to leverage these assets to drive the company to profitability."

That drive to profitability also brought about other changes at Herndon, Va.-based LifeMinders. For one, the company said it has eliminated its wireless marketing unit, due to hostile market conditions and a realization that companies were "not yet ready to pay a sufficient amount" for the service.

The unit's president, Tim Haley, left to pursue other business interests, according to the company.

This is a sizable turn of events -- just six months ago, the company bought New York-based wireless messaging firm smartRay for $32.5 million in stock and cash, to give it wireless marketing capabilities.

The company also added that it laid off about 19 percent of its workforce, which at last count was about 110. It is not known how many of the positions eliminated were from the wireless unit.

In addition to its wireless unit, LifeMinders said it would "closely evaluate" the performance of its outsourced technology division. Spokespeople said that area was also impacted by the sluggish online ad market, which led to slower-than-expected sales cycles and weaker overall demand.

"We have simplified our focus to our core direct marketing business," Bulkeley said. "And while the past quarter has seen some challenges, our core assets -- an enviable membership base, a scaleable infrastructure, and a seasoned team of direct marketing professionals -- are intact."

Overall, LifeMinders spokespeople said tighter credit policies combined with the soft ad market contributed to wider-than-expected losses. While the overall number of advertisers remained constant at about 205, the average spend per advertiser fell during the quarter, LifeMinders said.

LifeMinders' quarterly revenues rose 45 percent from fourth quarter 1999, to $11.6 million. Before charges, the company posted a loss of $8.4 million, or $0.33 per share. According to Thompson Financial/First Call consensus, the Street expected a $0.12 per share loss for the quarter.

After charges -- including a $49 million write-off for smartRay -- the company will post a net loss of $70.5 million, or $2.77 per share, for the quarter. This, too, is a remarkable change in fortunes for the company: last quarter, LifeMinders beat the Street's estimates of a $0.23 per-share loss by $0.06.

For the full year, LifeMinders reported $53.9 million in revenues, up 285 percent from 1999. Full year 2000 losses, excluding charges, were $41.1 million, or $1.72 per share. (The Street expected a $1.53 per-share loss.) Net annual loss was $109.5 million, or $4.59 per share, compared to a loss of $32.8 million, or $6.26 per share for 1999.

"The consumer unit had a challenging quarter but we still have significant assets from which to build the business," said LifeMinders president Allison Abraham. "Our scaleable targeting capabilities are highly desired and our mix of offline advertisers is increasing. Leveraging these areas will be our focus over the next several months as we drive to profitability."

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