After the layoffs, the site, owned by News Corp. will have close to a thousand workers on its payrolls.
Big and bloated
Owen Van Natta, a former Facebook executive and the present chief executive officer of MySpace, who took over the reigns in April this year, said that the staffing levels of the organization were bloated and acted as a stumbling block in the company’s endeavor to become a competent, team-oriented set up.
Jonathan Miller, recently appointed as the chief digital officer to revamp the operations at MySpace, averred, “MySpace grew too big considering the realities of today’s marketplace. This restructuring will help MySpace operate much more effectively both structurally and financially moving forward.”
The company did not disclose the severance costs or how much money it intended to save through the lay offs.
Advantage Facebook
Rupert Murdock’s News Corporation (NASDAQ: NWSA, ASX: NWS, LSE: NCRA) acquired MySpace in 2005 for $580 million. The acquisition appeared astute as in the very next year Google Inc. (NASDAQ: GOOG) signed a $900 million deal to sell ads on the site.
MySpace edged past Facebook when it came to the number of users in the United States, even though Facebook had more users worldwide.
But the scenario has changed of late as MySpace continues to lose luster to Facebook. According to comScore, the latter has come neck to neck with MySpace in the United States by clocking close to 70 million members.
MySpace has not been able to live up to News Corp’s financial projections. Last year, Fox Interactive Media, the unit that includes MySpace, underachieved its $1 billion revenue target by 10 percent.
Doug Creutz, an analyst with Cowen & Co. in San Francisco, remarked, “Two years ago MySpace seemed like it had unlimited upside, and people were throwing around valuations in the multibillions of dollars. The site has lost a lot of that cachet.”
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