Extreme Networks To Cut 16% Of Workforce

The moves are part of an ongoing corporate restructuring at Extreme, whose strategy is changing under CEO Oscar Rodriguez.

Extreme said in a statement Thursday that it expects to take a pre-tax restructuring charge of about $3.5 million for its fiscal fourth quarter, which ended July 3. The company also plans to consolidate its software engineering resources into fewer facilities, freeing up dollars for Extreme to invest in R&D.

Rodriguez was named Extreme's new CEO last August. In a March interview with CRN, Rodriguez discussed a strategy to focus on markets where Extreme is best suited for growth: education, cloud services, and service provider opportunities.

The cuts announced Thursday continue that corporate makeover, Rodriguez said. The announcement marks Extreme's third major round of layoffs in the past 18 months; it previously cut 9 percent of its then-workforce in October 2009, and 5 percent in January 2011.

The current round of cuts will be made in all areas of Extreme's workforce except for R&D, according to Extreme.

"I expect that these actions we have taken over the last two quarters, in combination with the new mobility and hosted data center products that we have announced for delivery in FY12, will position the company for stronger results and improved returns for our shareholders," Rodriguez said in a statement.

Rodriguez has been charged with returning Extreme to consistent double digit operating income following a period of financial decline at the networking vendor. Several Extreme solution providers told CRN in March they've noticed a turnaround, especially in sales and channel management, which many agreed had fallen off course in recent years. About 95 percent of Extreme's business goes through channel partners.

Rodriguez has also continued to make changes to Extreme's executive ranks. Gavin Cato joined Extreme as vice president, engineering, in June to head up Extreme's R&D efforts and engineering teams, and David Ginsburg, who was appointed to lead strategic marketing at Extreme in December, was named chief marketing officer last month. Paul Hooper, vice president of corporate marketing, left the company.

Extreme's fiscal fourth quarter earnings call is scheduled for Aug. 1. It said Thursuday that it expects fiscal Q4 revenue to be $88 to $90 million, above the previously released guidance of $80 to $85 million.