New Edge Networks Cuts Staff By 30 Percent
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New Edge Networks Monday announced it is eliminating 135 jobs, or about 30 percent of its workforce, in a proactive step to stay on a path to profitability and stretch a new cash infusion through much of next year.
The announcement comes after nearly one month after the competitive local exchange carrier netted about $140 million in a third round of financing.
About 100 of the jobs eliminated today are at the company's headquarters in Vancouver, Wash. The remaining jobs are spread in various cities and states. In addition to the layoffs, New Edge Networks also is planning to consolidate sales and regional offices. Over the past 18 months, New Edge Networks grew from five co-founders to 455 employees companywide.
"New Edge Networks is a strong company and we want it to stay this way," said Dan Moffat, president, CEO and co-founder of New Edge Networks. "We are taking this tough step now as a dosage of preventative medicine to avoid drastic surgery later. The pain of losing or watching our entire company hit the wall later is deeper than the agony of cutting jobs now. We want to ensure the overall survival of our company."
On Oct. 18, New Edge Networks announced it raised $139.9 million in a third round of equity and debt funding, bringing total invested capital in the company to $302.6 million in just 15 months since it was established. New Edge Networks intended to couple this funding with additional senior bank debt and create a "fully funded" financial plan, putting itself in a position of driving its destiny.
"Unfortunately, the senior bank debt market currently is not open as a source of needed capital for us," Moffat said. "This puts us in a position in which we can wait - with uncertainty - for the debt markets to re-open or we can immediately take the steps necessary to make our latest capital infusion last through much of next year. We chose to take the tough step now."
In an e-mail message distributed to all New Edge Networks employees, Moffat wrote, "The team we assembled is second best to none. Individually and collectively, we have demonstrated an unmatched ability to execute and produce record industry results. Without results, our investors would not maintain confidence in providing continued funding."
New Edge Networks provided affected employees an attractive severance package that included severance pay, stock option vesting, job hunting assistance and counseling. The company also permitted affected employees to purchase their PC's or laptops at significant discounts. Employees are eligible for rehire if their skill sets match positions that may open later.