The gains of early summer were ghosts by winter for BitTorrent, which has both renegotiated its recent Series C round of financing and re-valued the company.

BitTorrent's new software may be looking good, but the company's visibly struggling. Layoffs last month eliminated (it is believed) 18 positions -- about half the staff -- and saw the departures of co-founder Ashwin Navin and CEO Doug Walker. (The former departure was in the works for several months, but Navin did take the November opportunity to announce that he was off to launch an incubator-type firm.)

In a letter allegedly sent to shareholders and forwarded to TechCrunch (doesn't the word "confidential" mean anything anymore?), current CEO Eric Klinker mainly cited troubles specific to the business, rather than the general economy, as the source of the trouble.

Klinker, who prior to November was BitTorrent's CTO, said that after that $17 million round of financing from DAG Ventures closed in late spring, the company came to realize that "some of the company's businesses were not gaining sufficient traction." DAG Ventures, the lead investor in the Series C round, agreed, and thought moreover that the round ought to be renegotiated.

Klinker's memo hints at how his summer and autumn went. "After evaluating DAG's claim, engaging in significant negotiations with DAG, unsuccessfully trying to raise funds from other sources, and taking into account the overall economy, the Company decided to work with DAG to significantly modify the terms of the Series C financing."

One of the other investors in the original Series C round, Quilvest, isn't taking part in the reworking. Two more, Accel and DCM, will. Accel was part of the company's Series B round in December 2006, which brought in $25 million; DCM (Doll Capital Management) participated in both of those rounds and was the sole party to the $8.75 million Series A round back in September 2005.

A DAG representative, John Cadeddu, now joins the BitTorrent board of directors; Ashwin Navin resigns his seat, a month after declaring to the staff his "excitement" at the prospect of staying on the board.

The memo from Klinker says that "all directors other than Mr. Navin voted in favor of and support the financing."

The company's new pre-money valuation is $28 million.