Continuing an effort to try to reduce costs, Kintera will have cut half its staff in two years by the time the latest round of layoffs take effect. And, the firm continues to loses money, although less than last year.

During its conference call on first-quarter results Wednesday afternoon, the San Diego-based software provider to nonprofits announced a reduction of 14 percent of its current staff of 276. The move is expected to save $1 million a quarter by the third quarter, which Chief Financial Officer Dick Davidson said would bring the company to profitability by the second half of this year. Company officials also said during last year’s first quarter call that they expected profitability by year’s end.

Kintera opened at 57 cents a share after Wednesday’s call, up one cent from the previous day’s close. The company raised $40 million in its July 2003 initial public offering before beginning trading that December. By April 2004, it had reached an all-time high of $17.73 per share. On March 20, it hit a 52-week low of 20 cents per share.

At one time, Kintera had as many as 550 employees and as recently as two years ago, there were 473 employees. Layoffs last spring pared the staff from 361 to a year-end total of 281. At the end of March, there were 276 employees and a 14-percent cut would drop the company to less than 240.

The latest round of layoffs was expected mostly to be in finance, followed by marketing and product development, according to company insiders. Last spring also brought calls for change in management from some investors, and shortly thereafter founder and CEO Harry Gruber stepped down, replaced by current CEO Richard LaBarbera.

Total net revenue for the first quarter was $8.9 million compared to $10.7 million for the first quarter of 2007. The elimination of five businesses last year was expected to impact annual revenue by $1 million, said Davidson. Transaction revenue also declined with the loss of two large customers, which contributed to a 14-percent drop in online donations processed, from $66.9 million to $57.8 million. One of those large customers, American Cancer Society’s Relay For Life, was lost to Austin, Texas-based competitor Convio.

The net loss in the first quarter was $4.3 million, an improvement of almost 50 percent more than last year’s first-quarter loss of $8.3 million. Total operating expenses were $9.2 million, a decrease of 37 percent compared to last year’s first quarter expenses of $15 million.

Early last month Kintera received notice about potential de-listing from NASDAQ for failing to keep up a minimum $1 stock price for 30 consecutive business days. The minimum bid price of the stock must close at $1 per share or more for a minimum of 10 consecutive business days by Sept. 29 to be in compliance with NASDAQ.

On Monday, Roth Capital downgraded Kintera’s stock from “buy” to “hold,” 15 months after making it a “buy.” Kintera, which trades on the symbol KNTA, ended 2007 with almost $16 million in losses, down from $33 million in 2006 and almost $42 million in 2005. For the first quarter of 2007, losses were $8.2 million. – Mark Hrywna and Paul Clolery