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October 10, 2006

InfoSpace layoffs announced

Posted by Kim Peterson at 3:45 PM

InfoSpace said today it is laying off 250 employees, or more than a third of its 670-person workforce, through the middle of next year as part of a broad restructuring.

The layoffs, announced in a regulatory filing, were not a surprise. The company said last month it had lost a big piece of business from one of its major customers, a wireless carrier that uses InfoSpace services to sell ringtones. Infospace didn't name the customer, but most observers guessed it was Cingular Wireless.

At the time, InfoSpace said its sales would be hurt and that it would undertake cost-containment measures.

As part of the restructuring, the company is losing its second director in a week. Chief Administrative Officer Edmund Belsheim Jr. will leave the company by Jan. 1 with a $1 million severance payment and a year of paid health insurance in hand.

Last week, the company announced the resignation of Rufus Lumry III, who left the board "for personal reasons."

The restructuring will cost InfoSpace about $6.5 million for severance costs, $1.5 million to get out of some facilities and between $4.5 million to $5.5 million to terminate certain agreements. Those numbers also include charges related to the previously announced closure of InfoSpace's office in Hamburg, Germany. There could be as much as $2 million in other restructuring charges through next year, the company said.

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