Storage service and management software vendor StorageNetworks said in a statement Wednesday that it will lay off 50 percent of its workforce and replace its CEO and co-founder, Peter Bell.
The Waltham, Mass.-based company said Bell will be replaced by Chief Financial Officer Paul Flanagan.
StorageNetworks, which moved from a mostly hosted-storage model to providing on-site storage, services and storage resource management (SRM) software, has seen sputtering sales during the past year. Revenue dropped from US$31.5 million in the fourth quarter of 2001 to US$22 million for the same period in 2002.
"Because of the current economic climate and the immaturity of the SRM software market, we have decided to focus our energies on the excellent opportunity we have to work with our partner EDS in further enhancing our storage management software products," Flanagan said. "As a result, we are reducing our sales and marketing organizations and non-EDS and non-SRM product development efforts."
The cuts will bring the company's workforce down to 110 employees.
Bell, who co-founded StorageNetworks in 1998, said he is leaving to "pursue other personal and business interests." Bell will continue to serve as chairman of the board of directors. Flanagan has also joined the board.
"As co-founder of the company, this is a particularly difficult decision for me personally. However, having someone as qualified and as committed as Paul to take over as CEO and president certainly makes this decision easier," Bell said in a statement.
Flanagan had served as StorageNetworks' CFO since March 1999 and as the company's chief operating officer since April 2002.
Scott Dussault, vice president of finance at StorageNetworks, will take over Flanagan's position as CFO.