New CEO Ed Meyercord says the company will move away from selling point products, while cutting 18 percent of the workforce will save $40 million.
During Extreme Networks' most recent quarterly financial earnings call earlier this month, new President and CEO Ed Meyercord promised a new strategic plan within 30 days that would turn around the networking technology vendor's fortunes.
Meyercord and other executives this week began implementing that plan
, which includes a new go-to-market effort that focuses on selling solutions and a restructuring effort that includes cutting the company's workforce by 18 percent—or 285 positions—in hopes of saving the $40 million in operating costs in the fiscal year.
The strategic plan revolves around changing how Extreme sells its products, Meyercord said in a conference call with analysts and journalists. The company needs to change from one that sells point products to one that sells solutions that include everything from its wired and wireless hardware platforms to its network management software, application analytics technology and services, he said.
"We already have the pieces to the solutions bundles," Meyercord said. "The question is, how are we packaging our solutions bundles to make it easier for our customers to consume? … Our customers are looking for solutions, not switches."
The job cuts reflect Extreme's new strategy. For example, the job losses in sales come as executives prepare to rely more on channel partners to sell the solutions, he said. Most of the job losses were immediate, with the remaining few to be complete by the end of July.
The new strategic plan continues a time of upheaval at the company, which saw revenue in the last quarter decline 16 percent year-over-year, to $119.6 million. Extreme lost $23.5 million during the first three months of the year. It also is playing in a market that is undergoing a significant transformation driven by such trends as IT mobility, big data analytics, social software and the cloud and is seeing the rise of such technologies as software-defined networking (SDN) and network-functions virtualization (NFV).
Meyercord in April replaced Chuck Berger, becoming Extreme's third CEO in the past five years. He quickly revamped the leadership team.
In his conference call May 21, Meyercord said the company would continue to target the midmarket, which he said is looking for solution bundles and is not being served well by bigger vendors like Cisco Systems.
"Our largest competitors market to these customers, but they don act as a single-source provider for comprehensive solutions," he said, adding that they also don't offer the same level of support that Extreme does.
A key to selling to this customer segment is offering a broad range of products and services that can be sold as bundles that are easy for organizations to implement. Part of the go-to-market strategy is letting businesses know what Extreme has to offer, the CEO said. Most customers know that Extreme makes strong wired networking gear, but they often don't realize that the company also has wireless technology—much of which Extreme acquired when its bought Enterasys Networks for $180 million in 2013—as well as software and services. And more is on the way, Meyercord said.
The company will focus on software-driven solutions and services that leverage the underlying hardware. It will continue to grow its SDN efforts, build out cloud-based offerings and invest in its EXOS—Extreme OS—network operating system, according to officials.
"Soon we will add cloud capabilities, managed services offerings and other payment models … that will bring new opportunities to our sales teams and partners," he said. "It's critical that we condition the market to rethink the Extreme brand and understand that we have evolved from our heritage as a single-point, high-performance switch provider."