Over the weekend Quark VS InDesign.com was contacted by a source highly placed within Quark’s worldwide headquarters in Denver, Colorado. What the source had to say was unsettling.

During the last six months I have met several times with different departments and executives from Quark offices in the U.S. and Switzerland. Specifics about current, future, and prospective Quark software products and services factored heavily into our discussions, but most of the conversation centered around Quark’s overall strategy and the sweeping changes to the global organization beginning with the appointment of General Electric veteran Ray Schiavone to the offices of President and CEO in November 2006 (read here). Everything I saw, everyone I spoke with, gave me hope for the return of a competitive, customer-focused Quark. It got me excited about Quark and QuarkXPress again. I wasn’t yet ready to declare “Quark is dead, long live Quark,” but I admit I was darn close—maybe I still am. If the information we just received is accurate, then my hope and excitement may be premature.

At the time of this writing, Quark’s Denver offices are still closed for the weekend, and Quark VS InDesign.com has not yet been able to reach the software maker for official comment. Although the weekend publication of this story also prevents us from reaching other sources for corroboration, the information below comes directly from statements made to us by a confidential source who is in a position to speak authoritatively about the Quark, Inc. organization and its personnel and actions. We’ll refer to this individual simply as the “Source.”

According to the Source, on Friday, 3 August 2007 Quark initiated a major reduction in force. The exact number of personnel laid off is not known, but was characterized as a “significant” number. Most of those laid off were notified of their terminations in e-mail messages directly from President and CEO Ray Schiavone; some employees were physically escorted from the Quark building at 1800 Grant Street in Denver. The majority of downsized positions were “customer facing,” which the Source notes are referred to internally as “luxury personnel.”

The layoffs come after alleged fiscal irresponsibility. “The company spends money like it is going out of style,” the Source said. The Source went on to qualify the statement by noting that company funds have been used to throw lavish senior executive summits and to purchase executive perks including season tickets to major sporting events and custom made gifts. Other recent meetings, summits, and training events thrown for industry analysts, key partners, and general QuarkXPress users may also have been more costly than Quark could afford. (Disclosure: Earlier this year I attended two such events at Quark’s expense.)

In a rare glimpse into Quark’s sales figures, the Source claimed that Quark has forecast the sale of 200 thousand upgrades from prior versions of QuarkXPress to version 7 in calendar year 2007. Actual sales are falling far short of the projection, the Source said, with only 35-40 thousand units sold so far this year. Unless sales pick up in the remaining five months of the year, reaching 40% of Quark’s forecasted goal will be optimistic.

Monday, Quark VS InDesign.com will attempt to reach Quark for official comment on the alleged reduction in force, irresponsible spending, and lower than projected sales.

Update: Quark has responded to the Source. Read “Quark Responds to ‘Quark Insider‘”.