Post by Moses on May 2, 2005 9:37:56 GMT -5
www.seacoastonline.com/news/04292005/business/39693.htm
5-2-2005
Enterasys to cut 300+ jobs
By Michael McCord
mmccord@seacoastonline.com
After losing almost $11 million in the first quarter of 2005, the main spin-off company of the former Cabletron plans to cut more than 300 jobs from its work force.
Enterasys Networks, based in Andover, Mass., said it plans to cut between $10 million and $13 million in expenses over the rest of the year.
Enterasys makes data switching and routing equipment for use in corporate computer networks. Chief executive Mark Aslett said the budget and job cuts would be done "with careful consideration," explaining that they are intended as part of a major effort to put the company back on the path of profitability by bringing costs in line with expected revenues.
On Thursday, Enterasys reported that its net revenue for the first quarter of 2005 was $80.6 million, compared with net revenue of $90.5 million in the fourth quarter of fiscal 2004. Net loss for the first quarter was $10.7 million, or 5 cents per share, compared with a net loss of $10.4 million, or 5 cents per share, in the fourth quarter of 2004.
Enterasys spokesman Kevin Flanagan said the earnings figures reflect a market downturn that "is much bigger than Enterasys" and has affected sales in both the North American and European markets.
Flanagan said that while a 30 percent cut in jobs target has been set, the company has yet to determine which departments will be affected the most.
"It won’t be a 30 percent cut for every single department," said Flanagan.
The company currently has 1,068 employees.
An unnamed third party has been brought in as an outside consultant, Flanagan said, to provide a "thoughtful evaluation" of the company at all levels. He added that no timetable has been set for how the cuts will be enacted and that the company has suspended all economic forecasts for the rest of the year.
In addition to its current financial woes, Enterasys has had to deal with various scandals since it was spun off from Cabletron Systems - the company co-founded by former Gov. Craig Benson - in August 2001.
In 2003, Enterasys agreed to a $50 million settlement with investors following a Securities and Exchange Commission investigation into false financial reports.
Five former executives are awaiting trial in U.S. District Court in Concord on charges of making false and misleading statements to the SEC, to auditors and in news releases. They are also charged with conspiracy and securities fraud.
Four other executives, including former chief executive Fiallo, have already pleaded guilty.
Enterasys was formerly based in Rochester and then briefly in Portsmouth before moving to Andover, Mass., in 2002. The company still maintains a small engineering department in Rochester.
For the second straight trading day, Enterasys’ stock price took a hit. After losing almost 40 percent of its value in Wednesday trading, it fell another 11 percent on Thursday, closing at 71 cents per share, down from the previous day’s close of 80 cents. More than 3.2 million shares were sold Thursday, an increase of 1.5 million shares on a typical day of trading on the Nasdaq.
This page has been printed from the following URL:
www.seacoastonline.com/news/04292005/business/39693.htm
5-2-2005
Enterasys to cut 300+ jobs
By Michael McCord
mmccord@seacoastonline.com
After losing almost $11 million in the first quarter of 2005, the main spin-off company of the former Cabletron plans to cut more than 300 jobs from its work force.
Enterasys Networks, based in Andover, Mass., said it plans to cut between $10 million and $13 million in expenses over the rest of the year.
Enterasys makes data switching and routing equipment for use in corporate computer networks. Chief executive Mark Aslett said the budget and job cuts would be done "with careful consideration," explaining that they are intended as part of a major effort to put the company back on the path of profitability by bringing costs in line with expected revenues.
On Thursday, Enterasys reported that its net revenue for the first quarter of 2005 was $80.6 million, compared with net revenue of $90.5 million in the fourth quarter of fiscal 2004. Net loss for the first quarter was $10.7 million, or 5 cents per share, compared with a net loss of $10.4 million, or 5 cents per share, in the fourth quarter of 2004.
Enterasys spokesman Kevin Flanagan said the earnings figures reflect a market downturn that "is much bigger than Enterasys" and has affected sales in both the North American and European markets.
Flanagan said that while a 30 percent cut in jobs target has been set, the company has yet to determine which departments will be affected the most.
"It won’t be a 30 percent cut for every single department," said Flanagan.
The company currently has 1,068 employees.
An unnamed third party has been brought in as an outside consultant, Flanagan said, to provide a "thoughtful evaluation" of the company at all levels. He added that no timetable has been set for how the cuts will be enacted and that the company has suspended all economic forecasts for the rest of the year.
In addition to its current financial woes, Enterasys has had to deal with various scandals since it was spun off from Cabletron Systems - the company co-founded by former Gov. Craig Benson - in August 2001.
In 2003, Enterasys agreed to a $50 million settlement with investors following a Securities and Exchange Commission investigation into false financial reports.
Five former executives are awaiting trial in U.S. District Court in Concord on charges of making false and misleading statements to the SEC, to auditors and in news releases. They are also charged with conspiracy and securities fraud.
Four other executives, including former chief executive Fiallo, have already pleaded guilty.
Enterasys was formerly based in Rochester and then briefly in Portsmouth before moving to Andover, Mass., in 2002. The company still maintains a small engineering department in Rochester.
For the second straight trading day, Enterasys’ stock price took a hit. After losing almost 40 percent of its value in Wednesday trading, it fell another 11 percent on Thursday, closing at 71 cents per share, down from the previous day’s close of 80 cents. More than 3.2 million shares were sold Thursday, an increase of 1.5 million shares on a typical day of trading on the Nasdaq.
This page has been printed from the following URL:
www.seacoastonline.com/news/04292005/business/39693.htm