Dublin-based interactive learning firm Riverdeep will cut costs by 20 per cent this year to help it achieve profitability by the fourth quarter.

Cost-cutting measures will result in some redundancies in the US, but will not affect staff at its software development centre or corporate headquarters in the Republic.

Chief executive, Mr Barry O'Callaghan, said yesterday the company expected to reduce costs by 20 per cent by downsizing sales and marketing and research and development. Last year the firm reported operating costs of about $65 million (€71.61 million).

He said there were no specific plans on job cuts but some "job duplication", which had occurred due to corporate acquisitions, could be reduced. These would not affect Ireland, he said.

Speaking after the company's a.g.m in Dublin, Mr O'Callaghan said Riverdeep would achieve sales of about $100 million this year and $200 million next year.

The timeframe to profitability had been cut from mid-2002 to the fourth quarter, he said.

Riverdeep would concentrate on developing its online distribution system for its educational products. This model, which accounts for half of Riverdeep's business, achieved margins of about 90 per cent, he said.

He said the education market in the US would not be affected by the economic slow-down there because of a year-on-year 18 per cent increase in federal funding brought in recently by President Bush.

Riverdeep's first annual report shows it paid more than $12 million to a number of corporate and legal advisers, which included Davy's Stockbrokers, towards its initial public offering last year.