Loudeye CEO resigns after just 5 weeks on the job
By Kim Peterson
Seattle Times technology reporter
Two directors and the chief executive officer of Loudeye have resigned after just five weeks on the job, and the Seattle company said yesterday it has ended its relationship with a firm hired to provide strategic advice.
Loudeye, which provides digital-media services, also said its shareholders have approved a reverse stock split to boost its share price above the $1 threshold required by the Nasdaq stock market. Shares of the company fell 14 percent yesterday to close at 25 cents.
Departing as president and CEO is Philip Gioia, who took the post Feb. 4. Replacing him is Jeff Cavins, 41, who was named to the board. Cavins, who joined Loudeye in November as senior vice president of worldwide sales, was previously a senior vice president at Exodus Communications, a Web-hosting and services company.
The shuffling is the second overhaul of Loudeye's management in less than two months. When the company hired Gioia, it also appointed Chad Waite Jr. and Gary Sbona to the board; they also have resigned. None of the three is talking publicly about why they left.
Gioia and Sbona are executives at Regent Pacific Management, a San Francisco company that specializes in restructuring financially strapped companies.
In a statement yesterday, Regent Pacific said it was hired by Loudeye on Feb. 3 as interim management "to identify strategic direction alternatives." The company said it completed the job it was hired to do and "no longer has any responsibility for (Loudeye's) direction and operation."
Waite, a partner with OVP Venture Partners in Kirkland, said his resignation was effective Monday but would not elaborate. "It's not really in anyone's best interest to discuss this," he said.
A Loudeye spokesman said yesterday that the company had appointed Gioia and Sbona to conduct an analysis of the business, and that the company was satisfied with the completed work.
Loudeye has 120 employees and has lost nearly $150 million from its inception in 1997 through the end of September. For the nine months ended Sept. 30, the company reported $10.1 million in revenue and a $20 million net loss. It had $20 million in cash and investments at the end of September.
The company's shareholders voted Tuesday to give the board permission to implement a reverse split at a ratio of up to
1-for-20, which means shareholders would end up with one share for up to 20 they own. The board has not determined whether to implement the split or what the ratio will be, the company said.
Loudeye provides Webcasting services and media samples to Amazon.com and other customers, and also restores and upgrades archives of traditional media into digital format.
Its founder and largest shareholder, Martin Tobias, was surfing in San Diego this week and did not attend Tuesday's shareholders meeting. He said he is optimistic about the digital-media market, even though many companies in the field have gone out of business.
Loudeye is getting close to profitability, he said, and the board of directors is trying to find the right direction for the company right now. That process "can be a traumatic thing," he said.
