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Clarent lays off 27 percent of staff

The Internet telephony equipment maker says the layoffs are part of a companywide reorganization that includes a new chief executive.

Internet telephony equipment maker Clarent will lay off 27 percent of its work force as part a companywide reorganization that includes a new chief executive, the company announced Thursday.

Clarent, which builds technology for people to make Net-based phone calls, will lay off 270 workers out of the company's 1,021 employees in the coming weeks, a Clarent representative said. The company laid off 10 percent of its work force in May.

Clarent, which ranks third in sales behind Cisco Systems and Lucent Technologies in the Net telephony market, also announced that Chief Executive Jerry Chang has stepped down but will remain with the company as board chairman and chief strategist, the representative said. Mike Vargo, Clarent's co-founder and chief technology officer, will become interim chief executive while the company searches for a replacement for Chang.

Like its rivals in the network equipment business, Clarent has been hit hard by the tepid economy and sluggish sales of equipment to telecommunications carriers. Clarent's reorganization comes as the company reported a second-quarter loss that was worse than Wall Street analysts had predicted.

The company Thursday announced a second-quarter loss of $9.6 million, or 24 cents per share. Wall Street analysts had expected a loss of 19 cents per share, according to First Call. Second-quarter revenue, however, was $63.2 million, a 123 percent increase over last year's second quarter.

As part of its restructuring the company will focus its efforts on corporate and consumer markets to help drive sales of its more expensive equipment that service providers use to build their Internet telephony networks, the representative said.

Clarent, whose biggest customers are carriers and service providers, also sells hardware aimed at businesses and consumers. The company, for example, sells equipment that allows service providers to offer consumers the ability to make phone calls over high-speed Net access.

In related news Thursday, Clarent President Barry Forman resigned after four months on the job, but he will remain on the company's board. Daniel Fung, who previously ran a Clarent business unit, becomes the company's chief operating officer.