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Company cuts staff after failed Palm deal

Extended Systems says it will trim 15 percent of its staff and sell its print-server business after a potential merger deal with Palm fell apart.

Extended Systems said Thursday that it would trim 15 percent of its staff and sell its print-server business after a deal to be acquired by Palm fell apart earlier this month.

The Boise, Idaho-based company said it closed a deal to sell its print-server business to Irvine, Calif.-based Troy Group for an undisclosed amount of cash. As a result, Troy will hire about 38 Extended Systems employees.

Extended Systems said it plans to cut 50 workers and contractors, or about 15 percent of its work force, in an effort to shave between 15 percent and 20 percent off its expenses by the end of the September quarter. The company is focusing on its business of helping business customers gain access to corporate data using mobile devices.

Two weeks ago, Palm and Extended Systems said they were calling off the planned acquisition, in which Extended Systems was to be acquired by Palm in a stock deal.

The exit from the print-server business and the job cuts had been anticipated as part of the Palm deal, and Extended Systems CEO Steve Simpson said after the Palm deal fell apart that the company would continue with its planned restructuring.

Simpson said in a statement Thursday that the amount of time and effort spent on the failed Palm merger has affected the company's business and will influence results for the next two quarters. However, the company said it sees "increased demand" for its software and has a healthy amount of cash.

In the current quarter, which ends June 30, the company expects revenue between $9.5 million and $10.5 million, down from the $11.4 million Extended Systems reported in the prior quarter.

Excluding a number of charges--including those related to the Palm negotiations, the job cuts and the exit of the print-server business--Extended Systems expects a loss for the June-ending quarter of between $2.2 million and $2.6 million, or between 20 cents and 26 cents per share. In the prior quarter, the company lost $1.9 million, or 18 cents per share.