Mitel Cutting 200 Jobs, Lowers Financial Forecast

By Jeffrey Burt  |  Posted 2012-08-09

Unified communications vendor Mitel is cutting 200 jobs and lowering its quarterly financial forecast in the wake of order delays and the struggling global economy.

Mitel executives said in a brief announcement Aug. 8 that its revenue in the most recent quarter€”which closed July 31€”will now come in between $138 million and $139 million, significantly less than the $150 million to $155 million the company had earlier projected.

The 200 job cuts€”about 10 percent of the company€™s global workforce€”will be completed by the end of October, according to company officials. Also as part of the restructuring plan, Mitel will close what officials called €œexcess facilities,€ though they did not detail what those facilities are.

More information will come when executives release quarterly financial numbers Aug. 30.

Issues around orders were a key factor in Mitel€™s decision, according to CEO Richard McBee.

€œOur results reflect orders booked that did not ship in the quarter, implementation delays on several customer projects and a general deterioration in the macro environment,€ McBee said in a statement. €œWe remain confident in our strategy and product leadership; however, we are taking immediate actions to size the business cost structure consistent with our broader macroeconomic concerns."

Mitel, which offers a range of communications and collaboration solutions based on its cloud-based Freedom unified communications (UC) architecture, is in a highly competitive market that includes the likes of Cisco Systems, Polycom and Avaya. When McBee took over the CEO reins in early 2011, he reorganized the company€™s business units and shifted its focus to the midmarket, a customer segment€”with 100 to 2,500 employees€”that is not beholden to a single vendor, such as a Cisco or Avaya€”but are more interested in the right technology, an open platform and choice. Mitel products fit well with those demands, McBee told eWEEK last year.

€œThis is a group of customers that select best-of-breed,€ he said at the time.

McBee also planned to leverage the channel more as a means of selling Mitel products.

The company in June reported solid fiscal fourth-quarter and fiscal 2012 numbers, helped in large part by a valuation allowance tied to Mitel€™s deferred tax assets in Canada, where the company is headquartered.

Revenue in the fiscal fourth quarter came in at $157.6 million, a 4 percent jump from the same period in 2011. Net income was $17.1 million, up from $9.9 million the previous year. For the entire fiscal year 2012, revenue grew to $611.8 million, an increase from the $589.3 million in fiscal 2011. However, net income fell to $49.2 million from $86.4 million the previous year.

Mitel has added to its product portfolio over the past several months. In June, the company unveiled its UC360 Collaboration Point, a high-definition audio and video appliance aimed at filling a gap between the high-end video collaboration systems from the likes of Cisco and Polycom and the UC products aimed at individuals using PCs, smartphones and tablets.

A month earlier, the company rolled out its AnyWare IaaS (infrastructure as a service) offering that enables IT departments to deploy a virtualized UC service in a private or hybrid cloud setting that is hosted by Mitel€™s service provider division, Mitel NetSolutions.

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