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Exhibit 99
ENGAGE ANNOUNCES PLAN TO COMPLETE INTEGRATION, IMPROVE MARGINS, AND FURTHER
REDUCE EXPENSES IN DRIVE FOR PROFITABILITY
Streamlined, integrated company to deliver enterprise marketing software
and interactive media for synchronized, multi-channel marketing;
Company to provide further guidance on January 17 conference call
ANDOVER, MA, JANUARY 4, 2001 - Engage, Inc. (Nasdaq: ENGA), a leading enterprise
marketing software and interactive media company, today announced a new
operational strategy designed to strengthen the company and accelerate its path
to profitability. Engage has simplified its organizational structure in an
effort to increase operational efficiencies, improve margins and further reduce
expenses. As a result, over the next several months employee headcount will be
reduced by 550 or approximately 50%, through a combination of layoffs, job
eliminations and attrition.
The new, streamlined Engage is built to leverage the company's unique
combination of enterprise marketing software and interactive media for
synchronized, multi-channel marketing.
"Engage is delivering solutions that address the need of companies to make
interactive marketing an integrated part of their overall sales and marketing
efforts," said Tony Nuzzo, president and CEO, Engage. "As interactive marketing
continues to evolve and mature, Engage's software, combined with its media
network, enables marketers to synchronize programs delivered over interactive
and emerging media with those delivered over more traditional channels."
Engage will become a more simplified organization with integrated sales, client
service, marketing and engineering functions, and is implementing operational
efficiencies, enabling it to eliminate numerous duplicate positions. Once fully
implemented, the workforce reduction and other operational changes are expected
to generate annualized improvements in operating margins and cost reductions of
approximately $120 - $150 million. The company expects to incur restructuring
charges as part of this action. The cash impact of these charges is expected to
be approximately $17 - $20 million. The non-cash components of the restructuring
charges are expected to be $23 - $25 million.
"We believe this major restructuring is necessary to enable the company to
position itself for future growth and to significantly reduce costs. We are
creating a fully integrated company with internal dynamics that facilitate more
effective communication and decision making," Nuzzo said.
Through these actions, Engage is integrating its multiple businesses, management
teams and operating units into a single, cohesive organization which will
include two worldwide sales and service operations groups - software and media.
The company expects to benefit from consolidated operations for software and
media sales,
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marketing and engineering. Furthermore, Engage is implementing a number of
changes that are expected to improve operational efficiency and margin growth
within each operating group.
These include:
o Increasing focus on software, which is designed to increase the
proportion of the company's revenues generated by software solutions,
which have higher gross margins than Engage's other businesses. This
in turn is expected to have a positive impact on Engage's overall
margins;
o Consolidating offices, including moving the principal operations of
the media business group from San Francisco to Engage headquarters in
Andover;
o In its media business, renegotiating agreements with some of its
network Web sites to increase the percentage of revenue retained by
Engage;
o An ongoing emphasis on improving operational efficiencies; and
o Combining ad serving for its media network and AdKnowledge services
onto the media network platform, while continuing to support its
AdManager software.
The two worldwide sales and service operations groups have direct responsibility
for customer sales and service, combined with revenue forecasts and attainment.
The worldwide software sales and service group, led by Dean Wiltse, is focused
on delivering enterprise marketing software solutions to both traditional
marketers and e-marketers to enable them to manage and deliver targeted,
synchronized marketing programs across multiple channels. Tom Rothfels will head
the worldwide media sales and service group which is focused on delivering
precisely targeted and optimized online marketing programs that can be measured
against response, sales or branding objectives.
The worldwide engineering group, led by co-founder Daniel Jaye, is responsible
for end-to-end product delivery and network operations. Betsy Zikakis will lead
the worldwide marketing group which will consolidate all product and corporate
marketing under one organization and will be responsible for lead generation,
sales support and product management. Each group is responsible for making a
positive contribution to gross margin improvements.
The company's goal is to achieve break even on a cash earnings basis by the exit
of the fourth fiscal quarter 2001. Cash earnings excludes amortization of
goodwill and other intangible assets, stock compensation, in-process R&D,
restructuring and acquisition costs. As of the end of November, 2000, the
company held $100 million in cash, cash equivalents and short-term securities as
previously reported. The company believes that its cash and cash equivalents
will be sufficient to fund Engage's operations through profitability.
Engage will host a conference call on January 17, 2001 at 4:30 p.m. EST to
provide further guidance. A live Web cast will be accessible at
www.engage.com/investor.
ABOUT ENGAGE(R)
Engage, Inc. (Nasdaq: ENGA) is a leading enterprise marketing software and
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interactive media company. A majority-owned operating company of CMGI, Engage
enables companies to harness the power of interactive marketing to create more
loyal customers, maximize revenue, and increase their brand's visibility and
recognition. Based in Andover, Massachusetts, Engage has European headquarters
in London and offices worldwide. For more information on Engage please call
877-U-ENGAGE or visit www.engage.com.
Statement Under the Private Securities Litigation Reform Act
This press release includes forward-looking information. All statements other
than statements of historical fact, including without limitation, statements
regarding the Company's intention to create a simpler, more efficient company,
the Company's ability to increase operational efficiencies and improve gross
margins, the expected benefits from consolidated operations, and the Company's
belief that its cash and cash equivalents will be sufficient to fund its
operations through profitability are forward-looking statements. These
forward-looking statements are subject to a number of risks and uncertainties,
which could cause Engage's future results of operations to differ materially
from those anticipated. These risks include our ability to reduce expenses and
improve gross margins, growth in online advertising, our ability to increase
sales of our software and media offerings, the impact of competition within our
industry, our ability to enter into additional strategic relationships, and
other risks detailed in Engage's 2000 Annual Report on Form 10-K and from time
to time in Engage's other reports filed with the SEC.
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