Analysts were not surprised by the move, which aims to save $10 million.
Facing a disappointing series of quarterly financial announcements and increasing competition from Google, Yahoo and MSN, online ad network Miva has announced it is restructuring and will lay off 20 percent of its work force, or approximately 80 employees.
"It's a difficult situation for us, but one that we felt was necessary in order for us to achieve our longer term goal for driving increased value to our advertisers," said a source within the company who wished to remain anonymous.
Miva, which operates in the United States and Europe, saw a net loss of $4.6 million in Q3 and a net loss of $73 million in Q2 2006. The layoffs are intended to allow the company to make $10 million in savings, and will affect employees across the company, the source said.
The restructuring did not come as a surprise to either Miva customers or analysts covering the ad network sector.
"Miva has a huge uphill battle. They are facing a number of factors they don't always have control over. The quality of traffic and the click volume they've received tends to put pressure on their margins," said Kevin Heisler, an analyst with Jupiter Research.
Despite the cutbacks, Joshua Stylman, managing partner of search engine marketing firm Reprise Media, which is a long time Miva customer, believes the company is taking necessary steps to continue its business.
"Miva has shown creativity over the years and have been around for awhile, so I wouldn't write them off entirely, but I'd definitely keep an eye on them. I'm not terribly optimistic of their ability to compete with Google and Yahoo either," said Stylman. "In a business like Miva where they are competing against Google, they are as good as the quality of their inventory and systems. And if either area sees the brunt of this cut, this would not be a good thing for Miva advertisers."
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