The stock slid over 11 percent today to trade as low as 3-15/16, down from yesterday's close of 4-7/16.
The enterprise networking provider announced today a net loss of $26.8 million, or $1.56 a share, compared to a loss of $17.3 million, or $1.03 per share, for the comparable quarter a year earlier.
Wall Street expected a loss of 35 cents a share, according to First Call.
Banyan's net loss included a one-time, pre-tax restructuring charge of $5.5 million, or 32 cents per share, for severance costs related to a 15 percent reduction of the company's workforce, facility consolidations, and other related costs. Banyan also recorded a one-time, non-cash charge of $8 million, or 47 cents per share, for previously recorded deferred tax assets in the fourth quarter of 1996.
"To reduce our operating expenses while going forward, the biggest variable is headcount, and we had to cut our workforce by 100 people," said VP of marketing Eugene Lee. "From a financial perspective, in the future it will pay off, but initially it costs money."
Banyan originally announced the 15 percent cut in its workforce in November.
Excluding these non-recurring charges, Banyan's loss from operations for the quarter was $12.6 million, compared to a loss of $10.4 million for the fourth quarter a year earlier.
"Our results reflect lower revenues for the quarter primarily due to the reduction of inventories with our third-party distribution partners, lower-than-expected end-user purchases of our VINES [directory software with messaging and management capabilities], and the impact of our restructuring activities," CFO Jeffrey Glidden said in a statement.
Banyan reduced worldwide inventories of its third-party distributors by approximately $9 million, resulting in lower revenue during the quarter.
"We basically sold $9 million less into the distribution channel. There is less of a need to have that much physical product sitting in a channel," said Lee.
The company also experienced lower-than-anticipated sales.
Fourth-quarter software revenues were $12.7 million, compared to $22.1 million in the same period last year. Banyan's international business reported sales $6.2 million, compared to $7.6 million a year earlier.
Lee explained that the lower sales were due to the cutback to sales channels, not a decrease in demand for the product.
"This is not a reduction in demand," said Lee. "In [the fourth] quarter Vines and StreetTalk were on target with our business plan. StreetTalk for NT produced $5 million in revenue which is great. In terms of the end-user demand, we feel pretty competent."
The company hopes to conclude its search for a new CEO by the end of the first quarter and expects to turn a profit this year.
"We are very confident that we will turn a profit by the end of the first half of this year," said Lee. "That is why we took all of these charges and got all of the bad news out of the way."
In other news, the company announced today that its Switchboard online directory will be the official directory for Digital City's network of online information resources and interactive forums.
StreetTalk Desktop, which works with the StreetTalk directory service within a company's networking system, will be available Wednesday. It is targeted at Fortune 500 companies, government agencies, manufacturing companies, and educational institutions, a company spokeswoman said.