e.Digital Corporation (fka EDIG)

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DataPlay lays off over 100 workers
Slow market in IPOs spurs cuts; 70 to 80 in Boulder lose jobs

By Janet Forgrieve, Rocky Mountain News
July 30, 2002

Boulder-based DataPlay Inc. slashed about half of its 240-person staff on Friday, after failing to raise additional operating capital.

The company, which makes quarter-sized discs that hold music, movies and text, as well as the tiny drives that read them, laid off more than 100 people, including between 70 and 80 in Boulder, said spokeswoman Suzanne Stephens.

The cuts were also necessary to appease potential investors, said founder and Chief Executive Officer Steve Volk.

"We had targeted investors who are into later-stage investments and mezzanine (funding) rounds," he said. "But those investors are looking for a near-term IPO, within 12 to 24 months.

"But the IPO marketplace is completely dead - that was our biggest problem. To get the financing done, we had to cut our burn rate. That translates to head count, unfortunately."

The company has raised about $119 million in venture capital investment. Volk declined to say whether, with the layoffs, DataPlay was any closer to securing funding.

He also did not say how much the company needs to raise.

DataPlay originally planned to have products on the market last fall, but manufacturing glitches repeatedly postponed the launch.

DataPlay makes the drives that read the discs, selling those to appliance makers.

Those sales to manufacturers began last quarter, and finished appliances have been available for sale on the Internet for several weeks, Stephens said, and will be in some retail stores this week.

Recorded music to play on them isn't expected to be out until the fall.
http://www.rockymountainnews.com/drmn/technology/article/0,1299,DRMN_49_1294617,00.html
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