Graphix Zone Announces Drastic Cuts

In a desperate corporate overhaul, Graphix Zone Inc. said it will abandon its core business of interactive music CD-ROMs, lay off 25 of its 70 employees and close three offices. The struggling Irvine-based company is best known as a publisher of multimedia CD-ROMs featuring performers such as Bob Dylan and Willie Nelson, but said that it hopes to rebuild itself as a publisher of computer games. Graphix Zone signaled it is on the verge of deep financial trouble, saying in a press release that “to continue its growth plans, the company may need to raise capital in the very near future.” It will take a $40-million restructuring charge in the current quarter because of the changes. As a result, the company expects to report a net loss of about $7.5 million on sales of $1.5 million to $2 million. In its most recent quarter, Graphix Zone posted a loss of $2.9 million on sales of $1.6 million. The company also said it will change its name to Ignite Inc.