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CyberBucks Software firm trims staff, refocuses on ‘shrink wrap.’



Lightspan Closes Office in Santa Monica, Lays Off 20


La Jolla-based eHelp Corp., a designer and manufacturer of software that makes Web sites easier to use, recently laid off 14 staffers, including CEO Christopher Calisi.

Kim Himstreet, manager of public relations, said the company is in the middle of a restructuring, de-emphasizing its main product called DynaHelp, and creating a new “shrink wrap” product that is more uniform and less expensive.

“The earlier product’s price was about $100,000 and up, while the new one costs between $1,000 to $10,000, and will be sold in a shrink-wrap (retail) form,” Himstreet said.

The 10-year-old company, formerly called Blue Sky Software, eliminated primarily sales and marketing jobs associated with DynaHelp, and one other executive position. After the layoffs, eHelp has 137 employees, Himstreet said.

Jorgen Lien, who co-founded the firm with fellow Norwegian Trond Bergquist, takes over as CEO. Calisi had been CEO for about 14 months.

Himstreet said the company is financially secure, and that two other software products are selling well. The company did about $22 million in sales last year , about 12 percent better than 1999. This year, revenues are expected to exceed last year’s figures, she said.

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Lightspan Closes Office: Lightspan Inc., a developer and maker of educational software and Internet products, said it closed its Santa Monica office and laid off 20 staff members there, retaining only four people and transferring them to its San Diego headquarters.

The 20 workers who lost their jobs were offered a severance package that included a minimum five weeks’ salary plus benefits, outplacement services, discounts on the purchase of their computers, and a 30-day period to exercise their vested stock options, the company said.

The layoff leaves Lightspan with about 550 total employees, including about 450 in San Diego.

The 8-year-old firm said it expects to save about $2.5 million annually from the closure. That may help its current situation, which, in light of its most recent financial report, isn’t exactly sparkling.

For the company’s third quarter ended Oct. 31, it lost $15.3 million on revenues of $11.1 million. For the three quarters, the loss was more than $28 million, or 64 cents per share, based on the outstanding 44 million shares. Revenues for the three quarters were $86.6 million.

According to its last 10-K report, Lightspan had an accumulated deficit of $206.5 million through the end of October. Its stock, traded on Nasdaq, ranged from 84 cents to $25.37, and was $2.75 as of Feb. 5.

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Websense Improves Cash Flow: Websense Inc., the San Diego-based maker of Internet monitoring software, lost $765,000 on revenues of $5.8 million for its fourth quarter, compared to a net loss of $3 million on revenues of $2.7 million for the previous year’s fourth quarter.

For the full year, the company lost $5.9 million on revenues of $17.4 million vs. a loss of $9.2 million on revenues of $8.6 million for fiscal 1999.

CEO John Carrington said the bright news is the company’s achieving $3 million in positive cash flow compared to the previous year-end position of minus-$1.1 million. Revenues are also growing 22 percent quarter to quarter, leading Carrington to predict profitability by the third quarter of 2001.

However, his prediction was qualified by the words, “on a pro-forma basis,” meaning investors should expect actual net losses on an SEC-reported basis.

Websense, which raised $65.7 million in its IPO last March, nearly doubled its total employment to about 180 this year, almost all of whom are based here.

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A Year Later: In another sign the Internet industry is reeling locally, the iLounge, a one-day gathering of Internet and related business executives, has been put on hold indefinitely.

“Right now, the event has been postponed because of a lack of volunteers,” said Phil Trubey, president of the San Diego Entrepreneurs Roundtable, which organized the first iLounge last March. The event, held at the Hilton La Jolla Torrey Pines, drew about 500 and featured a “Gong Show” comedy show and a daylong series of speakers.

Trubey, CEO for MerchandisingAvenue.com, admitted the economic travails affecting many dot-coms and other tech firms might have something to do with the pronounced lack of enthusiasm to mount another iLounge.

“It’s in the pre-organizational stage. It may stay there or it might get picked up,” he said.

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Entropia Finds Funding: Entropia Inc., a San Diego firm that says it is “creating the world’s largest Internet and enterprise distributed computing service,” raised $24 million in its series B round of financing.

The funds, co-led by Moore Capital Management and RRE Ventures, will be used to expand Entropia’s corporate infrastructure, business development and services.

The company has produced the technology that enables organizations to use their PCs during idle time for either for-profit or nonprofit causes.

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More Second-Round Funding: San Diego based eVideo Inc., formerly called Cubic Video Technologies Inc., obtained $3 million in investment financing from senior executives of Qualcomm Inc., Leap Wireless International and Kahn Capital Management.

The firm produces hardware and software for network digital video applications. The technology is used to digitally record and transmit video used in the surveillance of chain retailers and other public and private businesses.

Among the company’s largest customers is Starbucks Coffee and gasoline purveyor Ultramar Diamond Shamrock.

Send any local high-tech finance news to mallen@sdbj.com.

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