CALIFORNIA: Incepta-owned Citigate Cunningham has laid off 40 of its 210 employees, slashed the salaries of senior-level managers by ten per cent and closed its fledgling Chicago office.
President and COO Joe Hamilton confirmed that plans to open a New York office have also been shelved.
The moves follow a restructuring that shrinks the agency's five business units into a single company.
But there appear to be other reasons for the cutbacks. Motorola moved the majority of its business to Hill & Knowlton, which won global PR account with fees in excess of pounds 2m last May.
The agency also lost significant revenue recently when Hewlett-Packard shifted most of its business to The Hoffman Agency.
Now the firm is under pressure to perform according to its deal with UK-based Incepta, which paid pounds 31m up front and agreed to pay another pounds 21m over the next three years if profitability goals were met.