LivingSocial Lays Off 10 Percent of Its Workforce

Daily deal site LivingSocial is laying off 400 employees, or 10 percent of its global workforce, CNNMoney has confirmed.

The sales, customer service, and editorial teams are taking the hardest hit, with most of the layoffs happening in the U.S.

In an unrelated move, Eric Eichmann, the company’s president of international operations, has also stepped down.

LivingSocial spokesman Andrew Weinstein told CNNMoney, ”We’ve gone through two years of hypergrowth, from roughly 450 employees to 4,500. The space has gone through such growth that we needed to catch our breath.”

The  layoffs follow a disappointing third quarter, in which LivingSocial showed an operating loss of about $565 million and a net loss of $566 million, while Amazon reported a net loss of $274 million, including “a loss of $169 million, or $0.37 per diluted share, related to our equity-method share of the losses reported by LivingSocial, primarily attributable to its impairment charge of certain assets, including goodwill.”

In a memo obtained by AllThingsD, LivingSocial CEO Tim O’Shaughnessy explained: “In layman’s terms, we took a charge of around $496 million because we had to revalue some of the companies we acquired last year. As you know, the market has also dropped over that same time for similar public tech companies. Those changes in valuation showed up as an ‘impairment’ in our financial statements, but they do not affect the day-in, day-out operations of the business.”

Update: A LivingSocial spokesperson provided us with additional details about the layoffs:

I can confirm that roughly 400 employees were notified that their positions were being eliminated today, or about 10% of our global workforce. A couple dozen of those positions were international, and the rest were in the U.S. After two years of hyper-growth from 450 to more than 4500 employees, these moves will align our cost structure against our 2013 plans and will help us set the company on a path for long-term growth and profitability. Specifically, they will us to allow us to invest more in critical priorities like marketing, mobile, and the hiring of additional technology staff.

Cameron Scott also contributed to this report.

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