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Cutting Back at CNET

Pink slips are the latest fashion accessory at CNET Networks (Nasdaq: CNET  ) . The online media company is letting 120 of its employees go in a move to streamline operations while focusing on its leading brands.

The move will result in $3.5 million to $4 million in severance and related restructuring expenses.

It may not make much of a dent, given that it represents less than 5% of CNET's total workforce, though perhaps that has been the problem all along. In many of its specialty areas, like technology and entertainment news, CNET is bumping up against nimbler blogs and cheaper consumer-journalism sites.

It would be a shame to see CNET lose its editorial bent. There are already a plethora of Web 2.0 hubs that draw healthy traffic on shoestring budgets. The margins may be juicy, but standing out is a problem. Besides, it's not as if one approach has proven more market-friendly than the other.

Community-driven niche-specific players like Internet Brands (Nasdaq: INET  ) and Dice Holdings (NYSE: DHX  ) , as well as editorial hotbeds like (Nasdaq: TSCM  ) , A.D.A.M. (Nasdaq: ADAM  ) , and (Nasdaq: ANSW  ) , are all trading in the single digits. CNET fits right in.

The layoffs come at a time when activist investors are trying to shake up the company. Even if they are a token response, it positions CNET as a company that is sensitive about the need to rattle its own cage.

I've recommended the stock to Rule Breakers subscribers, twice. It hasn't been one of my better market calls, but I still believe it has all the right ingredients to become a faster-growing company. The properties are too popular -- generating an average of 83 million daily page views in the latest quarter -- for the lethargic growth that CNET has been producing in recent years. I'm not sure if CNET can do more with less, but standing still is never an option when you're under fire.

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