Akamai Technologies Inc. is making some tough decisions to put expenses more in line with demand by reducing its staff by 25 percent.

The Internet content-delivery company said it expects to end the year with 550 employees. It said it will focus its market efforts on its EdgeSuite product line. In the customer department, Akamai plans to continue to focus on enterprise and the federal government.

The restructuring is expected to save the company as much as $35 million a year.

With the announced job cuts, October is turning out to be a bit of a mixed blessing for Akamai. Last week, the company extended its relationship with America Online. The extended deal calls for AOL to use Akamai's EdgeSuite service to enhance the performance and reliability of its content. Akamai will deploy its edge servers in AOL's backbone network worldwide. The servers will act as a private content delivery network for AOL members.

Yesterday, the company reported a narrower year-over-year net loss in the third quarter of $47.5 million, or 42 cents a share compared with a net loss of $55.4 million, or 53 cents a share, a year ago. Revenue on the other hand, dropped 17 percent compared to Q3 2001. The company ended the quarter with roughly $142 million in cash and marketable securities.

The company continues to battle with Cable & Wireless over patent infringement accusations. Last week, C&W asked a U.S. District Court to stop Akamai from selling the products, claiming that Akamai's products infringe on a C&W patent. Akamai denies the charge.

Akamai shares were taking beating on Wall Street this morning, down 9 percent to 90 cents as of 10:46 a.m. EDT.