Hoover's Reduces Staff by 20%

Posted on September 28, 2001

Hoover's, Inc., a provider of online business information, announced plans to focus on its subscription products, reduce its cost structure and shift the responsibilities of several key management positions. The company is reducing its staff by 20% and closing its London office.

``Over the past four months, our management team and our board of directors have been working together to strengthen our company,'' said Jeffrey R. Tarr, Hoover's president and CEO. ``We performed an extensive review of our products, services and market segments and determined that we need to make a number of changes to our business in order to position the company for long-term growth, achieve net income profitability and strengthen our company overall.''

Hoover's business model consists of multiple revenue streams including subscriptions, advertising, licensing, books and CD-ROMs. However, the company views subscriptions, which generated 63% of total revenues in the quarter ended June 30, 2001, as the principal growth driver in the current economic environment. Hoover's also plans to focus on marketing products towards sales, sales support and business development professionals and senior executives with similar needs.

``Hoover's has historically focused on a broad mass market encompassing all businesspeople and their diverse set of needs,'' continued Tarr. ``But market data shows that our revenues are concentrated within a more focused segment comprised primarily of professionals engaged in sales, sales support and business development. We intend to focus our efforts and resources on this customer segment that is the largest generator of revenue for our business today and that we believe offers the greatest opportunity for future revenue growth.''

Hoover's will be discontinuing its non-core and unprofitable lines of business. As a first step, the company eliminated its Hoover's Intelligence Monitor and NewsStand services -- decisions that were announced last quarter. The company plans to further streamline its service offering by discontinuing the Travel and Careers portions of Hoover's Online, as well as a number of features targeted toward the individual investor.

As part of these new initiatives, the company is reducing its staff. ``As part of the shift in focus and including the closure of the London office, we have made the very difficult decision to reduce headcount by approximately 20% since the end of our last quarter, through a combination of a reduction in staff, voluntary severance and attrition,'' said Tarr. ``We have also implemented changes in executive compensation plans to more tightly align total compensation with changes in responsibilities and company performance. We are hopeful that these actions will enable us to improve our top and bottom line results and advance us toward our goal of delivering net income profitability no later than the quarter ending March 31, 2002.''

Executives who previously had leadership responsibilities for the company's three separate divisions will now have functional responsibilities that will cut across all lines of business. Russell Secker, formerly the director of operations and finance and chief operating officer of Hoover's European operations, will serve as senior vice president of product management for Hoover's, Inc. Secker will also maintain responsibility for international expansion. Secker led marketing for D&B Europe from 1996 to June 2000; Jani Spede, formerly senior vice president and publisher of Hoover's Online, will serve as SVP of sales and marketing. Spede led Hoover's advertising sales during its peak and will continue to oversee advertising sales, but will now focus primarily on growing subscriptions, Hoover's core business; Carl Shepherd, formerly executive vice president of Hoover's Media Technologies, will serve as EVP corporate strategy and development, and will also be responsible for the company's licensing business.