Shiva to lay off 125
The company will take a charge of $9 million to $12 million during the second fiscal quarter and reduce its workforce by 20 percent.
This layoffs are part of the networking company's worldwide restructuring effort aimed at cutting costs. Shiva has said that it is trying to align its financial model with the recently announced strategic focus on providing remote access solutions for business.
As a result of the restructuring, Shiva expects to recognize a pre-tax charge in the second quarter of fiscal 1998 of between $9 million and $12 million. For the same quarter a year ago, Shiva reported a net loss of $1 million, or 3 cents a share. Revenue was $39.7 million.
The Bedford, Massachusetts-based company expects that these latest actions will result in annual savings of between $10 million and $15 million, with significant impact expected in the third quarter.
The restructuring, in which 125 jobs will be eliminated from the company's total workforce of 575 employees during the next several months, will result in the closing of all Shiva operations at its facility in Edinburgh, Scotland, and the relocation of some of the company's technical support staff to its facility in Wokingham, United Kingdom. The Edinburgh facility primarily was focused on jointly funded engineering activities with Nortel.
Shiva also plans to continue streamlining several areas of the company through facility consolidation, head count- and expense-reduction, and research and development restructuring.
Since Shiva launched its streamlining effort last February, it has completed several strategic initiatives, including the acquisition of Isolation Systems; the completion of an $80 million OEM agreement with Nortel, and the first shipment of the LanRover VPN Gateway.
"The most difficult part of structuring Shiva to capitalize on the growth in the business access market is that we must eliminate activities that are not central to our strategy," James Zucco, Shiva chairman and CEO, said in a statement.
Shiva stock dipped to 9-7/8 in early trading, down 5/16 from yesterday's close of 10-3/16.