Mitel Cutting 200 Jobs, Lowers Financial Forecast

Mitel executives, pointing to sales delays and a shaky economic environment, are cutting 10 percent of their workforce and shuttering some facilities.

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.