Struggling Myspace has been forced to cut almost 50 percent of their workers while it works to rejuvenate itself and try to come up with a plan of action since it has been losing users who have changed over to Facebook.
All in all, the social-networking business cut 500 of its 1,100 workers.
Myspace CEO Mike Jones admitted that the decision was hard, but that it was necessary changes that were taken to give the company a clear path for future grown and profitability. He added that the changes were made due to issues related to their legacy business and didn’t reflect the performance of their product. He said he believed the new organizational structure would help them to move fasters, develop more products and be more financially flexible.
The layoffs were announced around the same timeframe as Apple and Verizon were making their announcement on Verizon beginning to sell their own version of the iPhone on Verizon’s network.
Myspace, a Beverly Hills, Calif.-based company owned by News Corp, has gone through several CEOs, completed a few design changes, and even signed a deal with Facebook to share some content in an attempt to rejuvenate its customer base. However, these measures don’t appear to have done the trick, according to what analysts are saying.
Jia Wu, an analyst at Strategy Analytics, has estimated that Myspace’s third-quarter revenue fell 25 percent to $163 million, from the same timeframe last year. Wu said Myspace’s fourth quarter was down between 30 and 40 percent.
The site went down from 108.1 million users in November 2009 to only 81.5 million users in November 2010. Their rival Facebook instead went from 350 to 500 million members in that timeframe.
Analyst Jeremiah Owyang, Altitmeter Group, added that the end was in sight for Myspace even before their former CEO Chris DeWolfe left in 2009. He says that the company didn’t make any new moves, while rival Facebook did. He based their problems on culture and leadership issues and says any changes they made were too little and too late.
Myspace has also lost ground to other places like Twitter and Yelp. It has been suggested that Facebook may even consider buying up Myspace and combining the two companies.
Facebook has reported that it raised $500 million through funding from Goldman Sachs and a Russian investor, which have helped the social networking site to become worth more than $50 billion, which is even more than Yahoo, eBay or Time Warner.
They are expected to have an initial public offering in 2012.