Wednesday, July 13, 2011

Extreme Networks Announces Job Cuts, Higher Sales Forecast

Extreme Networks announced 110 job cuts -- or 16% of its worldwide workforce. The cuts are expected to lower operating costs in FY'12 by approximately $20 million with the goal of enabling the company to achieve consistent double digit operating income. The company will take a pretax restructuring charge of approximately $3.5 million in its fiscal Q4 which ended July 3, 2011.

Extreme Networks also announced that it anticipates that Fiscal Q4 2011 revenue will be above prior guidance of $80-$85 million, and will be in the range of $88 - $90 million. In addition, non-GAAP EPS for the quarter should be $0.01 to $0.02 per share, compared to prior guidance of $0.03 - $0.05 per share. EPS on a GAAP basis is anticipated to be a loss in the range of $0.02 - $0.04 per share, and includes estimated charges of approximately $1.5 million for stock-based compensation expense and $ 3.1 million for restructuring charges, net of reversals.

"Extreme Networks is progressing as planned with its strategic company transformation. In Q3 we announced a shift in our strategic focus to target select high-growth vertical markets by aligning designated sales and marketing resources to bring more focus to these market verticals. We also focused our R&D investments by aligning our efforts around a single product architecture which is expected to raise R&D productivity and drive more feature velocity," said Oscar Rodriguez, president and CEO for Extreme Networks. "Now, we are rebalancing employee levels in all organizations to drive down fixed costs, while continually working to lower variable operating costs to ensure market competitiveness. We expect these changes will allow us to drive a competitive stance by increasing R&D resources to advance product leadership and by driving more investment in field marketing and brand awareness, while allowing the company to attain consistent double-digit operating income."