NeoPlanet Lays Off 40% its Staff

Web browser firm NeoPlanet Inc. Wednesday cut 40 percent of its staff, lost its CEO, and began a reorganization to shift its focus away from Web-based advertising and toward software licensing.

Tempe, Ariz.-based NeoPlanet laid off 41 of its 99 employees late yesterday afternoon, and indicated that president and chief executive officer Drew Cohen resigned.

In an brief excerpt in this morning’s Arizona Republic, NeoPlanet’s new chief executive, Warren Adelman, said that the firm would switch from an advertising-supported business model to a licensing and service format.

Adelman, who was formerly executive vice president for business operations, added that new applications of the company’s technology would be forthcoming. He also said the firm expects these changes to bring NeoPlanet to profitability next year.

The firm, a unit of Bigfoot Interactive — a New York-based Internet yellow pages and directory service, which also owns email marketing firm Bigfoot Interactive — positioned itself to businesses as a marketing tool. In the same way that some companies develop customized MP3 player skins as part of their online marketing campaign, NeoPlanet encouraged interactive marketers to create branded skins for the company’s browser.

The company is best known for its customized browsers for movies, such as Universal Pictures’ “How the Grinch Stole Christmas,” and for browser skins devoted to professional sports teams, such as the Phoenix Coyotes.

The firm also sold deals in which banner ads and other rich media content could be “pushed” to users of a branded skin — allowing, say, Universal Entertainment to send marketing messages to users of its “Grinch” browser skin.

Despite the general downturn in online marketing spending, the layoffs come as a surprise to the local business community — since NeoPlanet was seen to be one of the most promising Internet-related companies in Arizona.

NeoPlanet had a $23 million round of financing in July, 2000 — a sizeable investment for the Southwest. The company’s product also seemed to epitomize the convergence of media interests, as the browsers linked communities of interest together via the Internet. The roster of NeoPlanet’s clients include Universal Studios, MTV, and New Line Cinema.

Further, NeoPlanet’s ties to the Hollywood entertainment industry and its New York roots gave it national connections that would seem to predict success.

Despite the positive outward perceptions, it seems that all had not been well in-house. Sources this morning reported to internet.com that, “the layoffs had been expected.”

Christopher Saunders and Pamela Parker, editors for internetnews.com‘s Internet Advertising Report, contributed to this story.

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