It is no secret that IncrediMail Ltd. (Nasdaq:MAIL: TASE:MAIL), a developer of free e-mail applications, is highly dependent on US search engine giant Google Inc. (Nasdaq: GOOG). Through Google's Adsense, IncrediMail shares in search-based advertising revenue, but questions have lately emerged about the future of the collaboration and its contribution to IncrediMail's revenue.
Google, it turns out, is considering changes in its collaboration policy with companies like IncrediMail, changes that will adversely affect them. IncrediMail has therefore concluded that it has to speed up its search for other partners, and streamline its cost structure to minimize the damage to its bottom line. Today's announcement is in line with these efforts.
IncrediMail has signed a outsourcing contract with India's Think Future Technologies Ltd. for quality assurance and other ancillary activities. IncrediMail said that, as a result of the contract, it will lay off about 20 employees (18% of its workforce) over the coming months.
IncrediMail COO Yuval Hamudot said that the measure was not intended to reduce costs. "The objective is to position IncrediMail on the development of a strategy for the coming year, not necessarily to cut costs," he said.
Think Future Technologies was not chosen by coincidence. Three months ago, IncrediMail appointed Josef Mandelbaum as CEO. He was previously CEO of American Greetings Intellectual Properties Inc., a subsidiary of American Greetings Inc., which offers e-greeting cards. American Greetings is a client of Think Future Technologies, as noted in today's announcement.
Hamudot added, “We believe that this move will enable the company to redeploy the freed up resources in product development and marketing while focusing on further improving the IncrediMail user experience, positioning the company for accelerated future growth. IncrediMail highly values the parting employees, and believes that the current market demand for quality assurance professionals, with IncrediMail's recommendations, will enable them to find employment in other companies."
IncrediMail's share price fell 1% in early trading on Nasdaq today to $5.96, giving a market cap of $58 million, and fell 1.3% on the TASE to NIS 21.44. The share price has fallen 40% since the beginning of the year.
Published by Globes [online], Israel business news - www.globes-online.com - on October 14, 2010
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