HONG KONG (07/31/2000) - Less than two weeks after it welcomed a new CEO, the Hutchison Whampoa Ltd.-backed China portal Tom.com Ltd. announced that it has laid off 80 staffers - 16 percent of its work force.
Sing Wang, the new CEO, said Friday that the company's Hong Kong office mostly shed editorial staffers but also let go of a few people who worked in production and technology. The cutback comes as the company says it is shifting its focus to establishing a stronger presence in China.
Six months ago Tom.com was one of the most talked-about IPOs in Hong Kong.
Fueled by investor frenzy for an Internet play stamped with tycoon Li Ka-Shing's name, grannies and brokers alike battled to apply for Tom.com shares. When the stock started trading on Hong Kong's Growth Enterprise Market on March 1, it quadrupled, giving the company a market capitalization of nearly US$2.5 billion. Despite its paltry content, Tom.com still enjoys one of the largest market caps of the most popular Chinese portals.
But the recent departure of two senior managers, the chief executive officer and the chief operating officer, left observers wondering what was next for this well-funded dot-com.
It turns out that what was next was a job cut.
According to Mr. Wang, before the layoffs, 60 percent of the staff worked in Hong Kong. The rest were based in China. He said the layoffs in Hong Kong will make the split between the countries more even, and mainland China's lower wages will enable the company to save on labor costs.
Another way the company will slow its burn rate is by buying and integrating more content, a practice that is cheaper than generating it from scratch.
"Content is damn expensive. This cutback is the first stage in understanding that," said Joe Sweeney, a research director at Gartner Group (IT) .
Mr. Wang described the retrenchment as "painful but necessary." He added that the company would be helping laid-off employees by "setting up hotlines, providing storage space for personal belongings and referring their resumes" to Tom.com's mother companies, Hutchison Whampoa and another Li Ka-Shing conglomerate, Cheung Kong (Holdings) Ltd.
Perhaps Carl Chang, the former CEO who left Tom.com about two weeks ago, will soon see some familiar faces. At the time of his departure, the company said he would head up a media convergence unit in Hutchison's e-commerce division.
Tom.com's shares closed at HK$5.75 at the end of Friday's trading.
Tom.com, in Hong Kong, can be reached at +852-2180-8001 or via the Web at http://www.tom.com.