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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

August 28, 2012 at 2:19 PM

RealNetworks cutting up to 160 jobs in overhaul

Another big layoff is happening at RealNetworks as the struggling digital media company tries to reorganize and regain its foothold.

Up to 160 jobs are being cut, reducing Real’s employment by up to 14 percent. Up to 70 of the job cuts will happen at Real’s Seattle headquarters.

Founder Rob Glaser, who returned to the chief executive position on July 3, informed employees today that that cuts are part of a new strategy and plan “to stop burning cash and to return the company to profitability.”

“Unfortunately, a major part of this streamlining entails reducing our workforce from approximately 1,140 people to about 980 people,” he wrote in a memo to employees today.

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Glaser (left) said the company is 80 percent of the way to having a plan to revive itself, but there are painful steps to be taken along the way.

“When I came back into Real after having been away from day-to-day operations for 2 1/2 years, I thought there was a pretty high likelihood that there would be a day like today,” he told employees. “I knew it would suck for everyone, and indeed it does.”

Real is cutting 80 jobs today. About 80 more employees were told their jobs will be cut over the next seven months, unless other positions aren’t found for them within the company, although Glaser’s memo suggests the plan is to reduce headcount.

If all 160 are cut that would be about 14 percent of the company’s employees. That includes 40 immediate layoffs in Seattle and 30 that may happen later. Other layoffs are happening at Real offices around the world.

“The cuts were across the board. All organizations within Real were impacted,” spokeswoman Barbara Krause said via email.

The company expects it will see $2 million to $2.5 million in charges related to the restructuring.

Real still is adjusting to the loss of its former stature as a leading digital media company. In recent years it shed assets and made commercial media services — provided to customers like phone companies — its major focus.

The ongoing reorganizations led to a series of significant layoffs over the past few years. More recently, the company has gone through a series of chief executives, culminating with Glaser’s return in July.

Real’s latest downsizing was telegraphed in an Aug. 8 earnings call when the company disclosed a plan to reduce costs by $45 million.

Here’s Glaser’s full memo, which the company released:

Dear RealNetworks Team,

I’m writing to provide an update on the progress we’ve made over the past 8 weeks and to provide some context and information regarding the layoffs that are taking place today.

When I came back in as Interim CEO on July 3rd, I said we would focus on 3 things:

Reviewing and assessing all of our businesses and new initiatives,

Coming up with a go-forward Strategy for RealNetworks that would set us up to grow and thrive, and

Putting together a plan to stop burning cash and to return the company to profitability.

I also said we would move fast, have a bias towards action, and would work hard to complete all 3 of these efforts within 2 months.

After a lot of hard work by many people across the company and around the world, today I report to you that we have indeed achieved the 3 objectives we set out to work on beginning 8 weeks ago.

Very soon I will have a lot more to say about our collective assessment of our businesses & new initiatives, and about our go forward strategy. Specifically, we have scheduled a series of company meetings – both in Seattle and at our main offices around the world – for on or around September 6th. After these meetings I believe that each of you in attendance will walk away with a clear understanding of our strategies and excitement regarding where we’re going.

Today I will discuss our plans to return the company to profitability — in a way that will set us up for future growth & success.

As we mentioned on our financial results call on August 8th, our senior team has put together a plan to cut at least $45 Million of annualized costs. This plan has several aspects to it; one of the main ones is to streamline our operations and to do things more efficiently.

Unfortunately, a major part of this streamlining entails reducing our workforce from approximately 1140 people to about 980 people. We are doing this in two phases. The first phase, which begins today, involves laying off approximately 80 people, who are being given notice today.

The second phase, which will take place over the next 3 to 7 months, involves approximately 80 more people, who are being notified today that there is a specific future date when their current assignment will be ending. We hope to redeploy a number of these people when their current assignments end, but as of today don’t know how many we will find positions for. These people are working on projects that will merge duplicate systems or otherwise make us more efficient.

I want to express my deepest gratitude to the approximately 160 people affected by today’s announcement, and also my remorse that we have had to take these steps. You have all made major contributions to RealNetworks. We are grateful for everything you have done for our company and our customers.

I also want to express my appreciation to the approximately 980 people who are not directly impacted by today’s actions, and to acknowledge that many of you are indirectly affected, because of the impact on your colleagues and friends.

Permit me to close on a personal note. When I came back into Real after having been away from day-to-day operations for 2 ½ years, I thought there was a pretty high likelihood that there would be a day like today. I knew it would suck for everyone, and indeed it does.

But I promised myself that if we did have to do a significant layoff, I would do everything in my power to make sure that when we did it we also knew where we were going. I wanted to be able to look everyone in the eye and tell them that we have a plan to succeed that I believed in from the bottom of my heart.

I feel like we are almost there. While we still have a few areas to work out, we have made great progress. I can honestly tell you today that we are at least 80% of the way to having such a plan for every major part of our company, and have line-of-sight on the final 20%.

This clarity on strategy, as you would expect, has significantly influenced how and where we are cutting costs, and where we are investing for the future. I look forward to discussing this further when we meet next week.


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