RealTime IT News

Enterasys Cuts 730 Jobs

Hobbled by accounting probes and sluggish sales, Enterasys Networks will dump 730 jobs, or 30 percent of its workforce, most by week's end.

Following the cuts, the Portsmouth, N.H., telecom gear maker will have 1,700 employees. Enterasys will also cut capital expenditures and working capital budgets as part of its restructuring.

"Cost cutting initiatives are an important first step designed to achieve cash break even as soon as possible," said William K. O'Brien, interim CEO. "We are continuously evaluating additional business improvement opportunities to increase sales effectiveness and reduce costs."

An Enterasys spokesperson was not immediately available to offer more specifics about the layoffs.

The job cuts are the latest in a series of rapid-fire developments that have darkened the company's prospects.

Friday, Enterasys said CEO Enrique P. Fiallo and two senior executives resigned amid an accounting probe, Securities and Exchange Commission (SEC) investigation and disappointing first-quarter projections.

Enterasys also said it expects losses after restating fourth- and first-quarter results. It projects fourth-quarter revenue of $145 million to $155 million, lower than past estimates because of revenue recognition problems in Asia Pacific.

These irregularities prompted a company investigation earlier this year and the firing of employees.

For the first quarter, Enterasys expects to report revenue of between $110 million and $120 million on sluggish sales. Analysts had expected earnings per share of 3 cents on revenue of nearly $190.87 million for the fourth quarter and 4 cents per share on revenue of $190.4 million in the first quarter.

Shares of ETS have been pummeled by the string of bad news. On news of the restructuring, however, the stock rose 0.21, or nearly 16 percent, to 1.55. In the last 52 weeks, it has ranged from 1.32 to 14.23.