Brocade To Cut 300 Jobs, Align Resources Around SDN3:28 PM EST Mon. Sep. 16, 2013
Brocade is cutting approximately 300 jobs from its global workforce as it looks to realign resources and bulk up efforts around its data center virtualization and software-defined networking (SDN) strategies.
The company, which disclosed the layoffs in an 8-K filing with the U.S. Securities and Exchange Commission (SEC) last week, said it's trimming its worldwide headcount from about 4,480 to 4,180. Brocade will incur between $20 million and $25 million in severance and other costs associated with the cuts, the filing said.
Brocade told CRN the layoffs are part of its broader initiative to trim $100 million in costs by the first half of 2014. This initiative, announced in May by Brocade CEO Lloyd Carney, is meant to help Brocade better target emerging markets like data center virtualization and SDN.
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"The goal is for Brocade to emerge out of this process as a stronger, more operationally fit company," a Brocade spokesperson wrote in an email to CRN. "As a result, we expect to improve ability to succeed in the hyper-competitive networking industry and over deliver in our ability to meet the needs of our customers worldwide."
In May, Carney said he wants to shuffle Brocade resources to place a greater emphasis on products including Brocade's SAN and Ethernet fabrics for virtualized data centers, along with its Virtual Router and Virtual ADX and VDX series switches.
Brocade last month said third-quarter revenue for its IP Networking segment was $133.9 million, down 8 percent year over year. In its data center IP business, however, Brocade said revenue from its VDX Series switches jumped more than 80 percent year over year, representing an annualized run rate of over $80 million.
Brocade, like most networking vendors, has been steadily bulking up its network virtualization and SDN line-up over the past year. In November 2012, Brocade announced plans to acquire SDN start-up Vyatta, which is now part of its Software Networking business unit. Last month, Brocade announced a network virtualization gateway, based on its VCS fabric technology, for VMware's new NSX virtualization platform.
Brocade competitors including Cisco and Juniper have also been boosting their SDN prowess, in hopes of dominating a market IDC projects to be worth $3.7 billion by 2016.
In addition to the layoffs, Brocade said in the SEC filing it would be consolidating some of its facilities and expects to incur costs between $10 million and $15 million as a result. These costs, along with those from the layoffs, are expected to take form in Brocade's fourth quarter this year.
PUBLISHED SEPT. 16, 2013