April 24, 2002, 10:15 AM — Two weeks after announcing a quarterly loss of nearly US$14 million, RSA Security Inc. said Wednesday that it would reorganize the company along three product lines and cut 200 employees, or 17 percent of its workforce.
The company's offerings will be organized along these lines: authentication products, developer solutions/encryption and Web access management, according to a statement released by the company. Sales, marketing and administrative groups will continue to serve all three products lines, though additional sales staff will be added for each line by reorganizing the sales division. The changes, which the company expects to implement this week, will save money and simplify the company's offerings, RSA said.
The reorganization and job cuts will result in a charge of between $8 million to $10 million this quarter, the Bedford, Massachusetts, company said.
The cuts will come primarily from engineering and sales since the majority of the company's employees work in those areas, said Arthur Coviello, president and chief executive officer of RSA. Cuts will also be made from administrative, operational and customer support areas, he said.
The authentication products line will be headed by Bill McQuaide, senior vice president, and will include RSA's SecurID and Keon product lines, the company said. This division will work to expand those lines and the types of authentication products that they support, including smart cards and digital certificates, RSA said.
The developer solutions/encryption line will be overseen by Victor Chang, vice president, and will house the BSafe product line and will work to move that line toward secure application components and embedded security products, RSA said.
The Web access management group will be led by Joe Uniejewski, senior vice president, and will look to expand the single sign-on and authorization options offered in the ClearTrust product line, the company said.
The moves were made "to get focus on the product areas we're going to be most successful selling in going forward," Coviello said. Web-focused products will take precedence here, as the company expects that Web services and Web-enabled applications will boom in the future, he said.
It became clear over recent months that the company needed better focus, more accountability and to stress the development of the products that have the potential to bring in the most revenue, he said. Wednesday's moves will achieve those goals, he said.
The company's recent quarterly loss provided additional impetus for making the moves, he said.
RSA blamed lower than expected spending for its first quarter loss, which it reported on April 11. At that time, the company promised to cut losses for the rest of the year and said it would likely lose between $0.04 and $0.06 per share in the second quarter.
Along with cutting staff, RSA will also stop development and sales of the client-server and custom agent components of the Keon product line, he said. Support for those products will be continued, though nearly all the engineers working on those products will be laid off, he said.
Because the job cuts in customer support will be small, RSA customers will see "very little (impact) in terms of service. Our service is going to be as good as ever," he said.
Despite Wednesday's news, Coviello expects the changes will reap positive benefits for RSA over the rest of the year.
"We're optimistic that by (the fourth quarter) and into next year we'll have a great resurgence," he said.
