Wednesday, March 7, 2001
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Posted on: Wednesday, March 7, 2001

Isle-based Internet firm cuts staff by 70 percent


By John Duchemin
Advertiser Staff Writer


Honolulu-based Internet service company WorldPoint said yesterday that it has undertaken a multinational round of layoffs and office closures, reducing staff by more than 70 percent and ending operations in Switzerland, Hong Kong and Dallas in a move to cut costs during tough times.

About 15 computer engineers and other staff were laid off Feb. 28 from WorldPoint’s Honolulu headquarters at 1132 Bishop St.

WorldPoint officials said most were connected to the company’s research unit, which ran up hundreds of thousands of dollars in costs but did not produce revenues.

Companywide layoffs will shrink WorldPoint’s workforce to 31 from more than 100. In Honolulu, the staff will shrink to 27 from more than 40. Four workers will continue to operate a San Francisco office.

The cuts, which WorldPoint said will save $6 million in 2001, represent a strategic about-face for the company, which expanded rapidly as a multilingual Web site translation service for large corporations. The new goal, company officials said, is to break even within a year.

WorldPoint is one of the latest Internet companies to cut back on money-losing expansion projects to produce profits — a strategy that runs counter to the growth-before-earnings doctrine of the late 1990s.

A rash of layoffs, bankruptcies and company closures has thrown Internet service markets into chaos. In that environment, many companies have scuttled or postponed their online "globalization" projects, designed to spread their Internet presence in non-English nations. This hit hard at WorldPoint’s revenue base.

With limited expansion prospects, WorldPoint was forced to cut back, said Massimo Fuchs, company president and chief executive officer. Fuchs said profitability will now become a "cornerstone operating principle."

Company officials said the need for cost cuts originated in WorldPoint’s aggressive but expensive expansion strategy, championed by Fuchs, which sacrificed profits in the name of international growth.

Formed in Honolulu in the mid-1990s by Dr. Robert Peterson, chief of surgery for Kapiolani Hospital, and Larry Cross, former associate dean of the University of Hawaii business school, WorldPoint moved last year from the Manoa Innovation Center to the penthouse suites in the former First Hawaiian Tower. The WorldPoint lobby is the former office of BancWest Chairman and CEO Walter Dods.

While WorldPoint succeeded in attracting high-profile clients — including Kodak, Mitsui, eBay, Fidelity Investments and Nike — its rapid expansion resulted in several hundred thousand dollars’ worth of losses per month, company officials said.

That was acceptable when technology stocks were rocketing, but in the nearly yearlong bear market, companies without profits are being hit hard.

"Frankly, we grew a little bit too big, which is why we’ve had to make these mid-course adjustments," said Ron Pettay, the company’s vice president of human resources.

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