Synacor Inc., the Buffalo Internet content provider, announced Wednesday that longtime CEO Ronald N. Frankel will step down from his job as soon as a successor is found.
Synacor’s announcement came as the company reported a 75 percent drop in profits for the fourth quarter of 2013, and a net loss for the full year, and as the company confirmed that it has eliminated 12 positions this week.
Frankel, who has served as Synacor’s chief executive since 2001, will remain on the company’s board of directors and continue as an adviser after leaving as CEO.
“I’m incredibly proud of the Synacor team that I’ve had the pleasure of working with over the course of my 13 years with Synacor, and the innovative products we’ve created,” Frankel said during a conference call with Wall Street analysts. “I’m confident in our ability to attract great leadership to Synacor and will continue to lead the company as CEO through any transition.”
The tech company reported net income of $200,000, or 1 cent per share, for the fourth quarter of 2013, down from $800,000, or 3 cents per share, from the fourth quarter of 2012, even though Frankel said its performance was at the “high end” of expectations.
The company’s board of directors also approved a $5 million stock-buyback program.
Total fourth-quarter revenues fell by 8.7 percent, to $29.4 million, as search and display advertising revenues fell by 11.4 percent, to $24 million, while subscription revenues increased by 5.9 percent, to $5.4 million.
Changes incorporated into Microsoft’s flagship Windows 8 operating system continue to eat into the revenue that Synacor generates from advertising and search queries. Window’s 8 automatically sets its own home page ahead of the pages that Synacor designs and maintains for its clients.
The company averaged 20 million unique visitors per month, compared with 20.3 million a year ago, and 158 million search queries, down by 30 percent from 225 million in the fourth quarter of 2012. Advertising displays, or impressions, fell by 17.1 percent, to 9.7 billion.
However, the company also reduced its expenses, which fell by 5.3 percent, to $28.6 million, including $15.8 million for the cost of sales.
For the full year, the company swung to a loss of $1.4 million, or 5 cents per share, compared with a profit of $3.8 million, or 14 cents per share, in 2012.
Annual revenues of $111.8 million fell by 8.4 percent, as search and display revenues fell by 11 percent, to $90.4 million, while subscription income rose by 4.9 percent, to $21.4 million.
For the year, the company averaged 19.8 million unique visitors per month, compared with 20.4 million in 2012, and 712 million search queries, down by 26 percent from 968 million in 2012. Advertising impressions fell by 2.8 percent, to 41 billion.
The company Wednesday cited its “significant progress” in developing new touchscreen and mobile products, and its newest Android homescreen, and plans to leverage its newest product investments in 2014.
Frankel also said the company is “thrilled to extend our partnership with Google for another three years” on the same revenue-sharing terms.
Synacor, which is headquartered on the Buffalo waterfront, had 350 full-time workers and employed about 15 contractors following this week’s elimination of 12 positions, spokeswoman Meredith Roth told The Buffalo News.
The job cuts were made as part of the “normal course of business and part of ongoing strategic decisions, as tough as some of those decisions may be,” she said in an email.
Synacor executives did not indicate how long the search for Frankel’s replacement might take, although Frankel guessed that it could be four to six months.
“From my perspective, I’m fully engaged. Nothing’s changed here at Synacor in terms of my role,” Frankel told the analysts, “and we’re focused on getting these products out.”
Synacor provides behind-the-scenes technology for cable, satellite, telecommunications and consumer electronics companies, creating Web pages, portals, cloud-based services, apps and other products that those companies provide to their customers.
The company grew out of one of Buffalo’s first tech companies, Chek.com, which offered affinity email addresses and was founded by three University at Buffalo classmates.
Synacor was launched in 2001, through the merger of Chek.com and MyPersonal.com, and Frankel was brought in to serve as its CEO and president from the beginning. He earned $1.4 million in total compensation in 2012, the year the company went public.
The company’s chairman, Jordan A. Levy, praised Frankel’s tenure as CEO. “We respect his decision to step down after 13 years of dedicated service,” Levy said in a statement Wednesday, “and we’re grateful for the strong foundation he is leaving his successor.”
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