Internet News Service Cuts Work Force in Half

IRVINE —  Citing financial troubles, Internet-based news service Scoop Inc. laid off more than half of its staff Thursday and plans to sell its core online products, according to sources at the company.

About 24 of the firm’s 40 employees were fired, sources said. The company’s president and chief financial officer, Mark Davidson, resigned on Thursday, as did three members of its board of directors--K.C. Craichy, Nils Andersson and John Kensey.

The company plans to find a buyer “as soon as possible” for its e-mail news service, Scoop Direct, as well as its Web-based news and research site, Intellisearch.

Just 10 days ago, the publicly traded company launched Intellisearch, a subscription service allowing users to pull stories electronically from more than 1,600 media outlets and profiles on about 20,000 companies.

“We have lots of trial users that are testing the services out for free--about 8,500 users,” said Rand Bleimeister, the company’s chairman.

But the firm only has 200 subscribers who pay $29.95 a month for either service, Bleimeister said.

Though Scoop has impressed analysts with its latest product, the company hinted at its financial uncertainty in its latest filings with the Securities and Exchange Commission.

In a November 1997 regulatory filing, the company said it had enough “cash and cash equivalents on hand” to cover its costs through January. After that, Scoop said, it would need substantial additional capital to continue, according to the regulatory filing.

The online news world has consistently had trouble making a profit, analysts say, as many consumers are reluctant to pay for getting information electronically.

“News services in general have a difficult time making money, so these online efforts are further subdividing an already difficult market,” said Dan Lavin, a technology analyst with the research firm Dataquest.

Scoop stock rose 6 cents a share Thursday, closing at $1.19 on the Nasdaq market.