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
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