Las Vegas software operation lays off 80 to cut costs

David Strow

Friday, Nov. 10, 2000 | 11:12 a.m.

Preference Technologies Inc., a Las Vegas Internet software firm, announced Thursday that it laid off more than half of its workforce in a cost-cutting measure.

The company said its board of directors ordered the layoff of 80 of its 113 workers "in order to substantially reduce operating costs." Employment now stands at 33, though President and Chief Operating Officer Bill Louden said further layoffs are not anticipated. The largest portion of the layoffs, about 25, were software developers.

In a company statement, Louden said the move was necessary to correct "many of the mistakes implemented by former executive management."

"'Mistake' was probably not the correct word choice," Louden said. "There was clearly a direction by prior executives to take this company in a much broader focus. Our investors said we have to focus on what we do well. You can't afford to go down too many divergent paths."

Two weeks ago, Preference named Las Vegas businessman Robert Forbuss the chief executive officer of the company. Forbuss, the chairman of the Las Vegas Chamber of Commerce board of directors, replaced Michael Calderone, who was named vice chairman. Calderone formerly held a majority of the company's shares, but his ownership is now below 50 percent after he retired some shares, Louden said.

Cost-cutting measures were made necessary by the company's rapid cash burn rate. As of June 30, the last period reported by the company, Preference had $5,000 in cash, after spending $5.33 million in the first six months of the year. Preference was able to raise cash to cover these previous expenses, but Louden said it was simply becoming too difficult to raise enough cash to cover such heavy expenses.

The company eliminated several research and development efforts, including research on 3-D interactive advertising software. Now, the company will focus on the development and sale of its Internet software product, MyGIG.

MyGIG is an Internet "portal" product, similar to software used by America Online users. The software is sold by Preference to businesses, which then put their brand on it and distribute it free to customers. The product delivers personalized news and information to the user, delivers advertising and messages from the business to the customer, and can even screen out advertising from competitors, Louden said.

"We're trying to focus on the one technology that's provided returns in the third quarter," Louden said. "We're still in the mode of raising capital, but our burn rate is much more manageable. We're a few days from releasing (our quarterly report), and I think that will show we're coming into an operating company stage."