Learn2.com Fires 60 Employees

SAN FRANCISCO (06/14/2000) - Learn2.com, an online seller of corporate and government training software, has handed out 60 pink slips and all but closed an office in Sausalito, Calif., in an effort to reduce its burn rate by $10 million a year.

The Learn2 staff was reduced from 290 employees to 230 three weeks ago, said CEO Stephen Gott. The company spread out the layoffs among all of its departments - data, finance, engineering and writing - in Sausalito, Denver, New York and Oklahoma, the company's home base. The Sausalito office is slated to be closed after the staff was cut from 25 employees to five.

Gott said the layoffs eliminated employee overlaps between Learn2's predecessor company, 7th Level, and three companies it acquired last year. He added that the layoffs should help his company become profitable by the fourth quarter of this year. "The company's never been in better shape than it is today based on the prospects, the lower expenses, the people we have on board," says Gott.

"I'm extremely pleased with our progress."

But the layoffs come less than a year after Merv Addelson, Mike Webster and Jason Roberts resigned from the board of directors. In addition, a senior manager who was the company's network administrator recently quit. "We've had zero turnover as far as the people we're concerned [with who] we need for our management," Gott says, declining to discuss the company's turnover rate any further. Electronic-distance learning is a growing but crowded marketplace, with companies like Trainingnet.com, Headlight.com and Click2learn.com fiercely competing to lead the pack.

Clark Aldrich, an electronic-learning analyst at the Gartner Group in Stamford, Conn., said the market's strength makes it "inconceivable" that the Learn2 layoffs are the result of too much fat. More likely, he said, the company did not make its revenue goals. Aldrich added that Learn2 has been hurt by its lack of focus - the company sells products to consumers, businesses and government - and needs to develop a clearer identity.

"It's a huge market, and there's a lot of room for a lot of people, but they haven't gotten their message out or created any compelling reasons for companies to invest in them," Aldrich says. "They're looking to find their way." Learn2.com has been publicly held since 1994, going through several business transformations since then. Early on, the company produced entertainment CD-ROMs before shifting in 1996 to media and electronic-commerce products. In February 1999, the company bought Street Technologies and followed the purchase by buying Panmedia in May 1999 and ViaGrafix in August 1999. The company changed its name to Learn2.com in 1999.

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