Profit-Seeking WebMD to Slash 1,100 Workers

WebMD Corp., the Atlanta-based online health-care company, said Thursday that it will eliminate 1,100 jobs, or nearly 20% of its work force, by the end of next year in what is perhaps the largest single “dot-com” layoff to date.

Although Internet companies are shedding workers almost daily, the scope of WebMD’s downsizing is unusually large. The outplacement firm Challenger, Gray & Christmas reported earlier this week that U.S. Internet companies cut a total of 4,805 jobs during September.

WebMD, which said it is shedding workers to reach its goal of becoming profitable next year, wasn’t the only dot-com firm to announce layoffs Thursday. Garden.com, an Austin, Texas, company that sells gardening products on the Web, said it will fire 93 employees, or 30% of its full-time staff.

“This oft-mentioned path to profitability has clearly been embraced by Wall Street, and that means you can’t be fat and free-spending any longer,” said Sheryl Skolnick, a Robertson Stephens analyst.

The cuts at WebMD, which attempts to connect doctors, patients and health-care companies online, are designed to reduce overlapping duties. The company’s work force doubled to 6,000 when it bought Medical Manager Corp. earlier this month. WebMD said it will take a pretax charge of $35 million to $45 million in the third quarter of this year to cover the costs of the restructuring, which is expected to save $250 million by the end of 2001.

WebMD executives also said they will cut back on marketing and other expenses. Last month, the company trimmed 100 workers in its first wave of cuts.

Investors responded by bidding up shares of WebMD to $14, up $2.75, in Nasdaq trading Thursday. Still, WebMD shares are off 63% for the year. The company, formerly known as Healtheon/WebMD, lost more than $128 million in the first half of this year on revenue of $167 million.

News of job cuts didn’t comfort investors in Garden.com. Its shares closed Thursday at a 52-week low of $1.06, down 31 cents in Nasdaq trading. The stock is off 88% this year.

In addition to the layoffs, Garden.com also said it had hired Robertson Stephens & Co. to advise it on “strategic alternatives.” Garden.com executives said they had a difficult time raising cash for the company but still have enough funding--between $11 million and $12 million--to last through the end of the year. The online retail business is not for sale, they said.

Garden.com lost $38.7 million on revenue of $15.5 million during the fiscal year that ended in June.

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Associated Press and Bloomberg News were used in compiling this report.