Extreme to cut out $7m in restructuring plan

Delayed customer orders are to blame for Extreme Networks' decision to embark on an emergency cost-cutting drive, claims the vendor

Extreme Networks is to embark on an emergency cost-cutting programme after customers put the brakes on their spending plans.

Issuing updated guidance for the three month period to 31 December 2012 – Extreme’s fiscal Q2 – the networking vendor said its sales were going to come in at about $75m (£46.7m), the lower end of previously announced guidance.

The firm said it also expected to book a GAAP net loss of between $4.5m and $7m, down from profit of $12.9m sequentially.

It blamed “delays in customer expenditure in EMEA and the US” for the downgrade.

Its restructuring programme is expected to cut out around $7m in reduced quarterly costs once fully implemented, but will cost it somewhere in the region of $6.25m, which will be recorded in the form of a charge in its Q2 results.

Extreme said it was taking action “to reduce costs to strengthen its long term competitive position in the industry and to help ensure that the Company can achieve its previously stated goal of a quarterly 10% non-GAAP operating income margin by the end of fiscal 2013.”

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