F5 Completes Measures to Shape Up
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After trying market conditions forced a revision of financial guidance for F5 Networks last December, the company announced that they would have to take immediate measures, including layoffs, to put them back on track.
After completing those adjustments, the company says it is aiming to break even in Q3 of the current fiscal year and return to solid profitability in Q4.
As a result of those actions, which included a 17 percent reduction in the company's workforce, Robert Chamberlain, senior vice president and chief financial officer said the company expects to reduce its operating expenses by $7 million to $8 million over the remainder of the current fiscal year.
In addition, he said the company is pursuing other means to reduce its expense structure and improve its operational efficiency.
John McAdam, president and chief executive officer, emphasized that reducing the company's cost structure is just one element of management's plans to reposition the company and enable it to compete successfully in a slower-growing economy.
"It's painfully obvious to everyone, including our customers and partners, that the business climate today is very different from what it was a year or even six months ago," McAdam said. "At that time, F5's biggest challenge was to acquire the people and resources necessary to stay ahead of demand for our products and services."
"In the December quarter, the sudden economic downturn and the resulting drop-off in revenue forced us to re-examine our entire business model and address issues that had arisen. Our just-completed restructuring -- both the reduction in headcount and the subsequent realignment of groups and priorities within the remaining organization -- resolved many of those issues," he added.
In addition to the workforce reductions, the company will make a number of other steps to adapt its business model to the realities of the current economic environment.
"During the next six months our product initiatives will be aimed at improving the functionality of our current offerings and delivering complementary products that will enable us to sell into a broader segment of the market." Said McAdam. "We are also turning up our investments in product integration that will allow us to enhance functionality across our entire suite of traffic and content management products."
F5 reported revenue of $24.7 million for the first quarter of fiscal 2001, ended December 31, 2000. The company also reported a net loss for the quarter, including the restructuring charge and tax benefits, of $8.9 million, or $0.41 per share.