Earthport, the UK Internet payments start up, says it is cutting 44 staff in a bid to shore up its financial stability and preserve cash. The cost-cutting measures come as the company finalises development of its new, industrial strength technology platform.
Earthport is currently migrating from a Windows NT environment to IBM mainframes. The company claims that the resultant payment platform has banking processing power and the ability to handle 70,000 instantaneous credits and debits per second and up to 150 million transactions per day.
In line with the planned transition to the new system, earthport says it will outsource an increasing proportion of the platform hosting while maintaining its product range. Most of the job losses involve technical staff.
"These cost reductions, which include the release of staff, will safeguard existing cash reserves and ensure financial stability of the company as it expands into its mainstream markets," says the company in a statement released to the London Stock Exchange regulatory news service.
The impact of these savings will be reflected in the full year's figures and beyond, says earthport, while the costs of £0.15 million, including staff reduction costs, will be included as an exceptional item in the results for the year ending June 2001.
"We listed on AIM in January and the prospectus showed a cash balance at end December of £12.6m," says an earthport spokesman. "It is a requirement of listing on AIM that we demonstrate sufficient working capital for at minimum a twelve month period. Savings from this cost cutting exercise were not incorporated into that equation and will improve significantly our operational cash burn."
Commenting, Graham Newall, chief executive of earthport says the restructuring signals the company's move from a development phase to a commercial, strategic roll-out. "The cost savings achieved will enable earthport to remain competitive in our core markets," he says.
Earthport is developing a server-side virtual wallet for consumer shopping on the Internet. The company has an agreement with UK direct bank Egg to introduce the wallet to UK consumers.