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May 20, 2011

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Brawl as Ku6 axes sales staff

SCUFFLES broke out in the Shanghai offices of a video-sharing website after the company decided to lay off 20 percent of its sales team.

Human resources officials at the Ku6 Media Co were said to have beaten up their former colleagues after the announcement on Wednesday.

Vice President Hao Zhizhong and Zeng Xinghua were also dismissed after they refused to sack members of the sales team as they were not satisfied with the deal offered to those who were being retrenched.

Hao wrote on his microblog on that what Ku6 did was "foolish and mean and devastating to the company."

Hao said: "More than 30 sales officials were forced to sign dismissal agreements before they could leave the company."

Ironically, a video clip of the uproar in the downtown office was uploaded on to Tudou, a rival website, and had been viewed more than 33,000 times by 6pm yesterday.

Lawyers representing Ku6 said they would take Hao to court for spreading rumors and defaming the company, reported yesterday.

Ku6 said in an e-mailed statement that the restructuring of its sales team was normal practice in the face of huge net losses and the process of dismissing its former employers was reasonable.

The NASDAQ-listed company said it was giving its advertising business to third-party agencies and exploring new marketing strategies and believed this would help cut operating costs.

The website saw net losses increase to US$15.42 million in the fourth quarter last year from US$10.6 million a year earlier.

Industry insiders said the restructuring of the sales force suggested that Ku6 was eager to get its business back on track, as it apparently lags behind bigger players, like Youku, which went public on the New York Stock Exchange at the end of last year, and Tudou.

Ku6's operating costs were US$16.2 million, compared with a revenue of US$16.6 million in 2010, while Youku's revenue was US$58.7 million with US$19.7 million in costs during the same period.

Ku6 was listed in 2010 through a share swap deal with Hurray Inc, a Shanda Interactive Entertainment unit.

Ku6 shares lost more than 12 percent on Wednesday.


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