Why WebMD Shares Jumped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of WebMD jumped today by as much as 13% today after the company outlined cost-saving initiatives.
So what: The company said it would lay off 250 people, which is about 14% of its total staff. These workforce reductions will take effect at the end of the year, but other cost-saving actions will be put in place throughout the first quarter of 2013.
Now what: WebMD is looking to reduce annualized operating expenses by $45 million. The company is also making its sales and delivery processes more efficient to boost collaboration with clients, and it will focus on its most important growth areas. As a result, WebMD will incur pre-tax restructuring charges in the range of $6 million to $8 million in the fourth quarter, primarily related to severance. The announced changes hadn't previously been factored into WebMD's full-year guidance.
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