Bowne to Close Internet Consulting Unit, Immersant - Will Reduce Workforce by 650
Press release from the issuing company
NEW YORK, April 23, 2001 - Bowne & Co. Inc. (NYSE: BNE) today announced that it is taking additional steps in its cost reduction program aimed at reducing annualized operating expenses by more than $30 million. These actions are being implemented immediately. The company estimates that the related restructuring expenses will result in a second quarter pre-tax charge to earnings of approximately $4 million to $6 million in its continuing operations.
Because of the unexpected, rapid deterioration of the Internet consulting market, the Company decided to close down its Internet consulting business, Immersant, which has been severely impacted by delays and cancellations of customer projects. The Immersant shutdown will result in charges of approximately $18 million to $20 million, of which $1.5 million is a cash charge for severance costs.
The company noted that the reductions in operating expenses announced today are in addition to the $20 million in annual cost savings previously announced. (See January 4, 2001 press release: "Bowne Announces Cost Reduction Initiatives Actions Align Cost Structure with Customer Demand.")
The Company's cost reduction plan includes immediate staff reductions of approximately 10% in its financial printing segment. In addition to the staff reductions, the Company is limiting all discretionary spending and continuing its on-going efforts to increase productivity by reengineering workflow to better balance customer demand with its distributive network. These reductions are a result of Bowne's operating units reviewing internal operations for efficiencies, consolidating departmental functions and eliminating duplicative job functions. Additional savings will result from reductions in fixed costs and general corporate overhead. Bowne expects to eliminate approximately 650 positions as a result of these initiatives, principally from the financial printing operations and the closing of Immersant.
Mr. Johnson continued, "Immersant was certainly not immune to the rapidly deteriorating environment for Internet consultants. While we believed that we could eventually have brought this business to profitability, we decided that, given the market instability and the realization that this unit required more investment capital than was prudent, we took a hard look at the future of this business and made the tough decision to exit the domestic web consulting and development business and focus our resources on our higher-potential global solutions business. Bowne Global Solutions will continue to offer a complete, global web content and site solution, which BGS and Immersant jointly provided to clients. The customer feedback to this integrated solution has been excellent-and one of the reasons why BGS has produced increasing positive results and steady growth. In addition, we will continue to provide the Internet services provided by our financial print, digital and outsourcing businesses. As I have said in the past, content fuels the web-and the demand for localized content on the web makes the adoption of a global e-businesses strategy for our customers absolutely vital."
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