WAYNE, Pa. - InvestorForce.com slashed its work force by 30%, eliminating 40 jobs as part of what management claims is a move to streamline the online search service and refocus its efforts on marketing and distribution of its online search service.
The cuts reduce the InvestorForce work force to about 96 people from 136.
Not all 40 people were laid off. Some - including the co-head of its fledgling hedge-fund business and its chief financial officer - resigned.
Jim Morrissey, president and CEO, said the cuts were not the result of problems with the business, but represent a strategic shift toward marketing and away from technology and product development. He said most of the job cuts were in the technology development area.
"We're rechanneling our resources and distilling the size of our technology team," Mr. Morrissey said. "This is a strategic, proactive decision to realign the company toward the next stage of our development." The InvestorForce technology and operations support group will continue to be staffed by more than 40 specialists who will develop, maintain and support the firm's technology platform, he said.
Scott Burney, co-head of the InvestorForce hedge fund program, resigned recently following a disagreement over who should manage Altvest the hedge fund program. Tom Zucosky joined InvestorForce April 5 as senior vice president of alternative investments to help manage the hedge fund group.
"We brought in (Mr. Zucosky), and there may have been a conflict over who should run the group," said Mr. Morrissey.
Robert Hull, chief financial officer and chief operating officer, announced his resignation, along with Susan Dooley, internal legal counsel and Shannon Piela, head of human resources.
Mr. Morrissey said Mr. Hull, who joined InvestorForce in April 2000, is leaving by "mutual consent." He said Mr. Hull wanted to work with a public company and "realized that this isn't going to be a public company in the near future." Mr. Hull's financial duties will be handled by Vice President of Finance Jim Mattox and an eight-person finance group.
The staff cuts were part of a recommendation made by Mr. Morrissey to the InvestorForce board of directors in March, he said.
A former InvestorForce official said the downsizing is just the beginning and that further cutbacks could be coming and could include higher level officials. "I would expect that there would be some big names in the cutback. It goes way beyond some nameless and faceless programmers," he said.
Mr. Morrissey downplayed reports that additional staff reductions and a possible major reorganization were in the offing.
While the firm is reducing its product development and technology staff, it has been adding staff in the sales and client service area to "continue the business momentum built up over the past year," he said.
In recent months, InvestorForce has added more than 10 employees in its distribution and client service groups, he said.
"This (cutback) has nothing to do with money," he said. "We are an early-stage company that is growing in the marketplace. We have raised a significant amount of money. We are well-capitalized; we have a long runway and have two years' worth of cash."
More job hunting
Money managers and consultants claim they are seeing an increased number of employment inquiries from current and former InvestorForce employees. "There are a lot of resumes on the street from InvestorForce people," said a principal at a major investment consulting firm.
The reason, industry sources said, is a lack of business momentum, database subscriptions' falling below expectations and slower-than-expected activity in the InvestorForce search exchange engine.
Mr. Morrissey hotly disputes the assertion that InvestorForce is behind its projected growth expectations. "We have done $2 billion in searches with another $7 billion in the works; $4.5 billion of that is in progress with the rest within 30 days," he said. "We have the cash flow and have the traction. We are growing in the marketplace. We have created a Cadillac and are now getting the market to realize that they need a car." But, he added, "We may be bigger than we need to be."
Derick Lemke, partner at ThomasWeisel Capital Partners LP, which has provided investment capital to InvestorForce, said his firm believes strongly in the business model.