Unable to sell its digital rights management products directly to media customers, InterTrust Technologies has shifted its business model to focus on licensing its DRM patents to companies that build entire technology platforms. As a result of the change in strategy, the company has initiated another round of layoffs that will cut its staff from 115 to about 35 employees by June 30. According to InterTrust CEO David Lockwood, the remaining employees will be centered around the company's engineering and intellectual property groups.
In a conference call to analysts, Lockwood noted that the market for stand-alone DRM products has not developed as fast as the company had predicted. The only way for InterTrust to continue as an ongoing operation is as a "right-sized company" or "in a strategic combination," Lockwood said. The latest downsizing is expected to cut the company's burn rate to $4 million by the third quarter. For the first period ended March 31, InterTrust had sales of $706,000, compared to $2.4 million in the first quarter of 2001; its net loss was cut to $12.4 million from $21.6 million.
