A mix of business reorganization, cost-cutting moves and a stock buyback lifted Informix (Nasdaq: IFMX) shares in Wednesday's afterhours trading.
After market close, the database and e-commerce software vendor announced plans to combine its five business areas into two divisions. The move includes the elimination of redundant units, which will lead to a third quarter restructuring charge ranging between $75 million and $90 million, the company said.
Informix also unveiled plans to repurchase 6.4 million shares.
The company's stock price rose to $5.32 in afterhours activity on the Island electronic communications network, following the announcements. Informix stock closed Wednesday' regular trading at 4 11/16, up 1/16 for the session.
By simplifying its corporate structure to two divisions: DataBase Business, led by Senior Vice President Jim Foy; and Solutions Business, headed by Peter Fiore. Informix hopes the consolidation will cut costs, streamline operations and improve its focus.
"By directing our efforts on two business operations, we further integrate the mission, identity, and core competencies of the previous business groups while significantly simplifying communications with, and enhancing support of, our global field operations, our customers and our partners," said Peter Gyenes, who recently replaced Jean-Yves Dexmier as Informix's president and CEO.
In addition to the one-time charge, Informix sees another $10 million to $15 million in first half 2001 charges related to its restructuring. The moves announced Wednesday will ultimately save Informix between $70 million and $80 million a year, the company said.
Informix is trying to transform itself into a provider of e-business software and services, but the transition has been rocky. The company last month reported disappointing second quarter earnings.
Company executives on Wednesday remained optimistic.
"We believe that Informix is in an excellent position to achieve significant operating leverage over the intermediate term as we accelerate revenue growth and increase company-wide efficiencies," Gyenes said.
The company ended June with more than $300 million in cash and cash equivalents and no debt.>