Extreme Warns On Q2, More Layoffs Coming


Extreme Networks will look to remove about $7 million per quarter in operating expenses as part of yet another round of restructuring -- one that will include layoffs and reassignments affecting about 85 employees.

Extreme confirmed those plans this week along with a warning that its second fiscal quarter will come in below previous expectations. Extreme in a statement said net revenue for the second quarter, ended Dec. 31, 2012, will be $75 million to $77 million, lower than previously provided guidance of $78 million, and that it will likely report a loss between $4.5 million and $7 million.

Extreme cited "delays in customer expenditures in EMEA and the U.S.," and said its loss would stem from both the revenue shortfall and expected restructuring charges.

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In an unattributed statement Thursday, Extreme said: "The company is taking actions to reduce costs to strengthen its long-term competitive position in the industry and to help ensure that the company can achieve its previously stated goal of a quarterly 10 percent non-GAAP operating income margin by the end of fiscal 2013."

An Extreme spokesperson told CRN that the expense reductions affect about 85 Extreme employees, most of whom will be laid off and some of whom have been reassigned to new roles.

"To focus on revenue growth, the company has integrated and focused its global data center and strategic alliance efforts under an experienced sales leader, Eileen Brooker, vice president of global alliances," an Extreme spokesperson said in an email to CRN Friday. "Our channel partner focus and sales leadership remains in place under Theresa Caragol, vice president of global channels. Both Eileen and Theresa are key points of channel, OEM partnership and sales leadership who report to Nancy Shemwell, SVP, global sales."

Caragol and Shemwell are both part of Extreme's newer leadership under Oscar Rodriguez, who became Extreme's CEO in August 2010. Caragol joined the company in April 2012, while Shemwell joined in September 2012. Brooker has been with Extreme since 2004 and was previously vice president of North America sales.

Extreme has been through several layers of restructuring in the past five years, including the 110 jobs it cut in July 2011 -- representing about 16 percent of its workforce at the time -- and headcount cuts of 9 percent and 5 percent in October 2009 and January 2011, respectively.

At the channel level, however, longtime Extreme partners have reported much progress, including the formation of a global partner advisory council and a range of new program incentives -- from a data center growth fund to promotions and marketing collateral -- that were announced at its partner conference in October.

PUBLISHED JAN. 4, 2013