May 7 , 2008

Breaking News
Layoffs At Kintera, Earnings Call Set For Today

One month after Kintera received notice about potential de-listing from NASDAQ, widespread layoffs have begun at the San Diego-based software provider to nonprofits. The cuts are ahead of the firm’s quarterly earnings call slated for this afternoon.

Company insiders said more than 40 people were cut starting Tuesday, although Kintera officials declined to comment in advance of today’s 4:45 p.m. Eastern conference call to discuss first quarter financial results. The department losing the most people was finance, followed by marketing and product development, according to insiders.

Roth Capital, one of the few analysts still tracking Kintera, downgraded the stock from “buy” to “hold” on Monday, 15 months after making it a “buy.” Kintera, which trades on the symbol KNTA, ended 2007 with almost $16 million in losses, down from $33 million in 2006 and almost $42 million in 2005. For the first quarter of 2007, losses were $8.2 million.

An insider told The NonProfit Times the earnings report “is not expected to be good” but that the layoffs were more “matching expenses to resources.” Another insider was less optimistic, saying, “This doesn’t surprise you, does it? You had to see this coming.”  Neither source would disclose the number of people losing their jobs.

Kintera received a notice from the NASDAQ stock exchange on April 2 for failing to keep up a minimum $1 stock price for 30 consecutive business days. The company has 180 days to regain compliance with the listing requirement. The minimum bid price of the stock must close at $1 per share or more for a minimum of 10 consecutive business days before Sept. 29 to be in compliance with NASDAQ.

The stock closed yesterday at 56 cents per share. Its highest price was $17.73 in April of 2004. Kintera raised $40 million in July 2003 in its initial public offering.

The firm lost one its largest clients, American Cancer Society’s Relay For Life, to Austin-based competitor Convio late last year.

The reduction in force is the second within about a year. Last spring investors forced out founder and CEO Harry Gruber and brought in current CEO Richard LaBarbera. The reduction in force shortly thereafter was approximately 70 people, down to 300. At one point, Kintera had more than 550 employees.

The Webcast and earnings call can be accessed online at www.kintera.com/webcasts. In addition, the conference call can be accessed by dialing (866) 356-4123 (617) 597-5393 for international calls), using conference code 72167212. - Mark Hrywna and Paul Clolery