Citigate Cunningham forced to reduce staff, salaries

PALO ALTO, CA: Citigate Cunningham has laid off 40 of its 210

employees, slashed the salaries of senior-level managers by 10% and

shuttered its fledgling Chicago office.

President and COO Joe Hamilton confirmed the layoffs and salary cuts,

and added that previously announced plans to open a New York office had

been shelved.

The cost-cutting moves were prompted by a restructuring that collapses

the agency's five business units - Brand Momentum, Momentum Research,

Fifth Gear, Cunningham Ventures and Cunningham Public Relations - into a

single company governed by three regional managers.

However, there appear to be other reasons for the cutbacks. Motorola has

moved the majority of its business to Hill & Knowlton, which won the

estimated $3 million to $5 million global PR account last


The agency also lost significant revenue this fall when Hewlett-Packard

shifted most of its business to The Hoffman Agency. Furthermore, client

Pitney Bowes has reportedly pared its agency PR budget by more than


The agency is also under pressure to show some of the profits promised

by CEO Andy Cunningham last summer when details of the acquisition by

UK-based Incepta were announced.

Incepta paid $45 million up front and agreed to pay another

$30 million over the next three years if profitability goals were


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