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Mike Jones, CEO of struggling social networking turned social media website MySpace, spoke to employees during a company wide meeting today about the different options it is considering. MySpace spokeswoman Rosabel Tao said “News Corp. is assessing a number of possibilities including a sale, a merger, and a spinout”.
A source familiar with the issue said the most likely course is that MySpace will be ‘spunout’ which would change the ownership structure, because someone from the venture capital or private equity community would invest in MySpace.
The news that a sale of MySpace is being considered comes just a day after the struggling social networking website announced deep layoffs. Rumors about layoffs have been circulating for weeks and on Tuesday, Jones confirmed that the company will implement a restructuring program that will effect about 500 employees, cutting about 47 percent of staff in all divisions around the globe.
NewsCorp purchased MySpace for $500 million in 2005, but so far it has been a bad bet, because MySpace has been consistently losing ground to Facebook, and sustaining huge drops in revenue. NewsCorp in November announced that MySpace saw its quarterly revenue plummet $70 million compared to the same period the prior year. “Current losses are not acceptable or sustainable”, said Chief Operating Officer Chase Carey when those earnings reports were revealed.
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