Enterasys parent announces 20% workforce reduction
But it’s unknown how many in New Hampshire are affected
Extreme Networks, parent company of Salem-based Enterasys Networks, cut a fifth of its workforce last quarter, but the extent of those layoffs in New Hampshire is not known.
The workforce reduction was in response to increasing losses since Extreme acquired Enterasys for $180 million in November 2013. The combined companies went on to lose $57.3 million in fiscal 2015, which ended June 30, and $71.6 million in fiscal 2014.
The layoffs are expected to cost Extreme between $13 million and $15 million in employee-related termination benefits, but save the firm some $40 million in operating costs.
Extreme posted a net loss of $15.7 million in the fourth quarter of fiscal 2015, slightly lower than the same quarter last year, even with revenue ($116.3 million) down 5 percent.
“We had a strong finish to fiscal 2015 while reducing headcount and realigning our functional groups to become more customer focused,” said Ed Meyercord, president and CEO of Extreme Networks, according to earnings call last week as transcribed by Seeking Alpha.
Part of the problem has been integrating the two companies, former competitors: Extreme, a networking company out of California, and Enterasys, the descendent of Cabletron Systems – once the state’s largest company located in Rochester.
“Look, if I go back to the Enterasys acquisition with Extreme, if you look at it on paper, you'd say that wasn't a very good deal. I think we had – there's no doubt, there were some execution issues. And it was harder for the teams to put the companies together than anticipated. That said, the combination of the two companies has been beneficial on many fronts from a product perspective,” said Meyercord in May, when he first announced the downsizing.
According to the company filings, Extreme employed 540 employees at the end of June 2014, but there was no breakout of how many were working in Salem, though at one point 600 people were employed at the company in New Hampshire alone, according to NHBR’s Book of Lists.
The company had no comment when asked about the extent of the layoffs and the current headcount at Salem.
In announcing the layoffs, the company estimated that the 60 percent of the savings would come from a sales force reduction, 20 percent out of research and development, 10 percent out of manufacturing operations and 10 percent out of administration.