SkillSoft to cut 120 Dublin jobs
Also 13 jobs in Nashua, New Hampshire
US e-learning company SkillSoft is to cut 120 jobs in Dublin in an outsourcing move.
People working in content R&D, localisation, curriculum development, content development and learning design will lose their jobs as part of the scheme. After the redundancies in Dublin, SkillSoft will employ about 60 people in Ireland. The job cuts also include 13 redundancies in Nashua, New Hampshire.
"The primary factors leading to this restructuring are the company's ability to more cost effectively utilise outsourcing partners to develop course content and the completion of certain research and development initiatives," the firm said.
SkillSoft said the total cost of the restructuring will be no more than $15m - including cash owed to the IDA (Irish Development Agency) - which will be recorded in the firm's fiscal fourth quarter results. The restructuring and the outsourcing plans are expected to help save the firm about $5m per year.
"SkillSoft has been able to successfully employ an outsourcing strategy in the past and believes that doing so on a broader scale will afford the company more flexibility to reinvest dollars that can be recaptured in an outsourcing model for other research and development initiatives and / or to increase the profitability of the organisation," said Chuck Moran, president and chief executive officer.
SkillSoft was formed in 2002 following the merger of Irish e-learning giant Smartforce and its smaller US rival SkillSoft. Shortly after the two firms merged, the new company admitted to several accounting inaccuracies, which prompted a raft of shareholder lawsuits that came on top of a long-standing lawsuit between SkillSoft and a rival firm called NetG. Earlier this year, the firm finally put its legal woes to rest through a series of settlements, claiming at the time that it would now be able to get on with business.
Nevertheless, the firm indicated on Tuesday evening that it faces challenges in the short term - such as higher competitive pressure and slower sales - and as such, has been forced to rein in its fiscal 2005 estimates. For the full year, the firm now expects revenue in the $212m to $217m range, down from earlier estimates of $221m to $225m. Its new target for full-year net income is $11.8m to $16m, compared with earlier targets of $21m to $24m.
"We, along with the rest of our industry, are facing a challenging and competitive market for IT spending that has resulted in reduced contract value in our core formal learning product lines," said Moran. "We continue to expect our revenue in the fourth quarter of fiscal 2005 to grow from the levels we have reported for the third quarter; however, based on our current review of our sales pipeline we expect the rate of growth to be less than we had originally expected."
In the company's third quarter, which ended in October, revenue amounted to $52.5m, slightly higher than the $50m reported a year ago. Net income during the period was $4.1m, or $0.04 per share, a figure that includes $0.9m in one-off charges. A year ago at this time, SkillSoft posted a net loss of $21.9m, or $0.22 per share, with $16m during the period going for the settlement of a lawsuit and $5.3m for restructuring. SkillSoft's gross margin during the recently ended quarter was 89 per cent, versus 91 per cent in the third quarter of fiscal 2004.