Fair Isaac, the Minneapolis-based provider of credit scoring technology, is cutting 420 jobs and shedding several business units under a restructuring programme designed to boost revenue and cut costs by $100 million a year.
The vendor says the 420 jobs will be cut through a combination of lay-offs and the disposal of six under-performing business units, including select telecommunications businesses, advertising services, government research and its Insurance Bill Review business which has already been sold to Mitchell International.
Once completed, the divestitures will result in the elimination 220 jobs. The vendor says moves to simplify its management structure will also result in the axing of 200 "lower-priority positions".
The divestitures, job cuts and an "aggressive cost management" plan will reduce costs by $100 million and yield pre tax savings of $35 million, says Fair Isaac.
Company CEO Mark Greene told reporters the restructuring will create a "smaller, yet more profitable" company.
Fair Isaac has seen its stock almost half since last April after many of its clients banks - which provide the vast majority of its revenue - were hit by the sub-prime crisis.
To make matters worse some in the US financial services industry have blamed Fair Issac's flagship FICO credit scoring system for failing to provide lenders with a clear view of a borrower's ability to repay loans and the probability of default.
Greene has defended the product - which is reportedly used by 80% of mortgage lenders - and told BusinessWeek in February that the FICO scores have not caused or contributed to the subprime mortgage problem and lenders that followed traditional underwriting standards "steered clear of subprime issues".
Despite this defence, Fair Isaac is overhauling the credit scoring system and says FICO 08 will be a better predictor of customer behaviour. However it is thought that the upgraded version is not likely to be available until later in the year.View Fair Isaac share price data