New Edge Lays Off 135
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New Edge Networks, a Vancouver, Washington-based wholesale broadband DSL provider in small, midsize and semi-rural markets, today announced it is eliminating 135 jobs companywide in a proactive step to stay on a path to profitability and stretch a new cash infusion through much of next year.
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.
"New Edge Networks is a strong company and we want it to stay this way," says 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."
In addition to the layoffs, New Edge Networks also is planning to consolidate sales and regional offices.
Raising $139.9 million in a third round of equity and debt funding last month, New Edge Networks brought its total invested capital to $302.6 million in just 15 months. The company 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," says Moffat. "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."
Moffat felt the layoffs were extremely unfortunate, yet necessary. 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 a severance package, including severance pay, stock option vesting, job hunting assistance and counseling.