By Paul Ploumis (ScrapMonster Author)
May 03, 2016 07:53:44 AM
SAN DIEGO (Scrap Monster): Washington-based Outerwall Inc. has filed a Worker Adjustment and Retraining Act Notice (WARN) with the state and local employment office. The company which owns mobile phone recycler ecoATM has decided to layoff almost 50% of its San Diego workforce.
The San Diego workforce will now be reduced from 218 to 111 workers. A total of 59 full-time and 48 temporary workers will lose their jobs. According to the company, financial conditions in other states are more favorable and it intends to hire for similar positions in its Louisville facility.
The job cuts are scheduled to happen in several phases from end-May to mid-July this year.
Drop in collection rates-a major concern
Outerwall had purchased ecoATM in 2013 for a sum of $350 million as an extension of its Redbox movie rental and Coinstar money counting machines. In a bid to raise the recycling volumes, it had added the number of mobile device recycling kiosks. The company had nearly 120 new kiosks during the second quarter of 2015 alone to boost collection of electronic waste including used mobile phones, tablets and other electronic accessories. In addition, it had relocated nearly 70 kiosks from grocery stores to busy shopping malls and huge stores. Despite all these, the company reported significant drop in collection rates.
ecoATM’s losses widened in 2015
The latest financial report released by Outerwall Inc., indicates that losses from the business widened during the year 2015. The ecoATM e-scrap kiosk business ended in a loss of over $100 million during the year. Currently, there are almost 2,250 automated ecoATMs across the country that accepts electronic waste including used mobile phones, tablets and other electronic accessories. The ecoATM venture reported operating loss of $137 million in 2015.
Gazelle acquisition aids Q1 2016 results
Outerwall took a strategic step forward through acquisition of online mobile phone recycler Gazelle in 2015. This not only helped the company to eliminate one of its main competitors in the market but also aided the company to deliver better results during the first quarter of 2016. The ecoATM division during the quarter rose significantly by over 113% to $42 million, with almost half being contributed by Gazello. The operating loss narrowed from $8.3 million a year before to $5.7 million during Q1 ’16. Outerwall Chief Executive Erik Prusch expressed the hope that the company will be able to report operating income profitability in 2016.
Based in San Diego, Calif., ecoATM (www.ecoatm.com) is the first company to create an automated self-serve kiosk system that uses patented, advanced machine vision, electronic diagnostics, and artificial intelligence to evaluate and buy back used electronics directly from consumers for cash or store credit. ecoATM's eCycling stations provide a convenient trade-in solution that:
electronically and/or visually inspect virtually any consumer electronic device,
connects consumers in real-time with a broad worldwide secondary market to ensure best pricing, and
pays consumers immediately in cash and/or store credit, and
automatically administers trade-in / trade-up promotions for retailers and manufacturers.