Tech Industry

StorageNetworks preps job cuts

The storage software company plans to cut 27 percent of its work force in an attempt to pare expenses.

StorageNetworks said Friday that it plans to cut 27 percent of its work force, as the struggling storage management software provider tries to shore up its operations amid a weak IT spending environment.

The company, based in Waltham, Mass., plans to cut 80 positions--bringing its total work force down to 215 employees. Over the past 15 months, the company has dramatically reduced its staff numbers from 670 employees to its current level.

"Taking into consideration the overall economic conditions, this reduction allows us to better align our cost structure with anticipated revenue from our software solutions and managed services business," Paul Flanagan, chief financial officer, said in a statement.

StorageNetworks has been struggling to rebuild itself. The company got its start offering data-storage hosting services to large corporations, but retreated to focus on software as did several of its peers.

In the past few months, the company has revamped its executive team. A new senior vice president of worldwide sales and business development was named in July, along with a new senior vice president of corporate and product marketing. And last month, the company's senior vice president of global services left to become chief executive at Paceline, a software company.

Analysts said the layoffs should preserve StorageNetworks' cash and allow it to transition into a software company.

"They have a lot of challenges in transitioning their business to a software licensing model," said Jason Ader, an analyst with Thomas Weisel Partners. "The layoffs are part of that strategy."

But StorageNetworks, which launched its first software product in the summer, still faces plenty of competition. IBM, EMC, Veritas Software and BMC Software are established players, while a number of start-ups with venture funding are also weighing in, said Ader.