Extreme to cull 110 workers in strategic restructure


Extreme to cull 110 workers in strategic restructure

Alex Scroxton

Extreme Networks has announced plans to cut $20m (£12m) in costs out of its business by the end of its next financial year, and will be reducing its headcount by approximately 16 per cent, with 110 positions understood to be at risk.

In a statement today Extreme said it would consolidate most of its software engineering resources into current facilities in lower cost venues, enabling it to boost its R&D investment. The axe will "in all functional areas outside of R&D".

CEO Oscar Rodriguez said that rebalancing employee levels would drive down fixed costs and help lower variable operating costs.

This is this is the second time in six months that Extreme's management has cut its workforce; in February a sluggish second quarter performance saw 35 employees given their marching orders.

"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," said Rodriguez.

Extreme said it will take a pre-tax restructuring charge of $3.5m in its fiscal Q4, which closed on 3 July. Full results are due at the beginning of August.

The firm expects sales for the final quarter of its fiscal 2011 to be somewhere in the range of $88-$90m, above previous guidance. On a GAAP basis, it expects to make a loss of between two and four cents a share.

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