Verio e-mail announces plans for more job cuts

December 27, 2001

Arapahoe County Web-hosting company Verio Inc., which in September said it would cut roughly 20 percent of its 3,250-employee U.S. work force, has told employees by e-mail to expect more cuts early next year.

"We understand the angst and uncertainty this news will cause," according to an e-mail sent Dec. 21 by Verio Chief Executive Justin Jaschke and company President Alain Andreoli. "We have chosen to be open with you about the additional restructuring to dispel rumors and speculation."

The two-page e-mail was posted Christmas Day on a popular corporate-bashing Web site. Verio spokeswoman Mona Peloquin on Wednesday confirmed the e-mail's authenticity, but said it was too early to discuss specific job-cut numbers.

"We're still in the process of finalizing details," Peloquin said. "Basically this is a continuation of a business strategy" the company announced in September.

Verio, acquired last year for $5.5 billion by NTT Communications of Japan, confirmed plans in September to close roughly half of its 50 Internet data centers and lay off more than 600 workers. Verio is one of a number of metro-area Web-hosting companies forced to retrench because of the dot-com collapse and the economic recession.

In an interview in mid-November, Jaschke said employment at the Arapahoe County headquarters was being cut from 200 to 164, and that a total of 27 of 47 data centers nationwide would be closed.

Jaschke maintained then that Verio has a bright future, once it completes its restructuring, which includes phasing out small, outdated facilities. He said the company also benefited by having NTT as a parent company. In the Dec. 21 e-mail to employees, Jaschke noted that NTT a day earlier had approved a plan to recapitalize Verio by converting existing debt into equity.

The Dec. 21 e-mail first detailed operational improvements made during the "difficult market environment" in 2001, including a hike in revenue generated per worker.

It was only on the second page that the executives wrote that the 2002 business plan being crafted would include a further restructuring of the business including "reducing expenses and debt, eliminating unneeded and under utilized facilities and further headcount reductions."