Emblaze Systems, the video streaming company, yesterday forced a 12 per cent pay cut on its senior executives and a 5 per cent cut on the rest of its 430 staff as it warned revenues for the year might be "substantially" less than forecast.
Eli Reifman, chief executive, said the pay cuts were not simply an effort to reduce costs but rather a sign the Israeli company felt culpable for the warning. "A profit warning is a profit warning and we need to take some responsibility as a company as a whole and as management in particular," he said.
Emblaze said yesterday it faced bigger-than-expected losses this year if it failed to get several sizable contracts, currently under negotiation, signed off. Its shares closed down 5p at 184p in London.
Analysts had been expecting the company to make a loss of about $24m (£17m) for the current year on sales of some $50m.
Mr Reifman, who is said to earn $200,000 a year and who will also have to take the 12 per cent cut, was adamant the contracts in question had been delayed and not cancelled.
"Right now, we have very significant contracts, each of millions of dollars, that will either be signed by the end of the year or not. But, if it [that revenue] does not fall into this year, it will definitely go into next half [the first half of 2002]," he said, adding: "Last year, for example, we got 60 per cent of the revenues in the last three days."
The company blamed the delay in the signing of contracts on the "ongoing economic difficulties" including the reduced spending plans of most telecoms firms. In addition, it said the late arrival of video-enabled mobile phones and devices had had an impact.
Emblaze, which has some $350m of cash, said its deal flow would become more predictable in 2003 as more telecoms firms launched multimedia services.