Egghead Cuts Another 50 Jobs Layoffs Lower Software Firm’s Employment Level To About 250
Egghead Software announced 50 more layoffs Thursday in a move that company officials say finally gets Egghead to optimal staffing levels to function solely as a retailing entity.
“There may be some things with our field operations that we still need to adjust,” said Kurt Conklin, senior vice president, “but in terms of our Spokane operations, this will get us pretty much where we need to be.”
Following the layoffs, Egghead’s employment at its Liberty Lake headquarters will be about 250. That is less than half the size of the company that Egghead moved to Spokane from the Seattle area last year.
The latest reductions, Conklin said, are related to the sale earlier this year of Egghead’s Corporate, Government and Education (CGE) division to Dallas-based Software Spectrum.
About 230 people worked for that division. Software Spectrum has retained many of those people and added about 20 people to a telesales operation it is establishing here. Software Spectrum’s Spokane employment is at about 200.
“We are real happy with what we see of the people there,” Judy O. Sims, Software Spectrum’s chief executive officer said Thursday. “Our plan would be to add more people to that operation over time.”
The 50 layoffs announced by Egghead Thursday came from outside the former CGE division, but they were people who provided support for that division.
“This is a necessary step in reshaping the company following the sale,” Conklin said.
The CGE division accounted for more than half of Egghead’s overall revenues.
Egghead moved its corporate headquarters from the Seattle area to Spokane last year in an effort to save money by operating in a less-expensive business environment.
At that time, the company had two primary business thrusts. It operates 164 retail stores nationwide. The company is in the process of altering its retail format from tiny software specialty shops to much larger stores that sell both software and high-end computer hardware.
Along with its retail division, Egghead sold software in bulk directly to large corporations, universities and school districts, and government agencies.
Disruptions related to the move of its corporate headquarters cost Egghead many of its CGE customers. So Egghead sold the division to Software Spectrum - a company specializing in CGE-type sales that is growing aggressively through acquisitions - in order to focus Egghead on retail sales.
The transition of the CGE division from Egghead to Software Spectrum is expected to be completed by Aug. 1.
“The completion of the sale of CGE marks a new beginning for Egghead,” Terry Strom, Egghead’s president and CEO, said in a news release Thursday. “Our future includes a stronger emphasis and expansion of our nationwide retail system, growth in our catalog sales and electronic commerce through our Internet ‘virtual store.”’
Egghead has turned in disappointing financial performances for several quarters as it has absorbed the costs of the upheaval caused by its corporate relocation.
It has incurred expansion costs in remodeling smaller stores into the new retail format, and in opening new stores. And the performance of some of the new-format stores has been uneven.
“You’re not going to see the real Egghead performance until we are actually completely through with the Software Spectrum sales transition,” Conklin said. “We are still supporting some of their infrastructure needs in terms of system support.
“But we expect that by the first of October, we will be running strictly as a retail company, and be in a position where our economic results will be indicative of our performance in executing the retail format,” Conklin added.
Egghead is asking the laid-off workers to remain with the company through Aug. 1 and is offering “pay-to-stay” bonuses plus a severance package as an incentive.
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