Extreme Networks Inc. (Nasdaq: EXTR) is cutting 110 jobs, about 16 percent of its workforce, in an effort to reduce its annual operating costs by US$20 million and lift its operating income into the double digits.

The company unveiled its restructuring plans as it announced that its fiscal fourth-quarter non-GAAP earnings per share (before one-time costs) are expected to be $0.01-0.02, lower than the previous guidance of $0.03-0.05. However, its revenues for the three months to July 3 are due to be in the range $88-90 million, slightly higher than anticipated.

On average, analysts had been expecting non-GAAP earnings of $0.04 and revenues of $81.6 million for Extreme's fiscal fourth quarter.

The headcount reduction, part of Extreme's ongoing plan to focus on a select number of high-growth sectors with a single product architecture, will affect "all functional areas outside of R&D," and will see its software engineering staff consolidated in "lower cost venues." (See Extreme Goes Big on Ethernet.)

The move, Extreme stated in its official announcement, will enable it to hire new staff in the coming year to focus on new product R&D. The company is planning to launch new "mobility and hosted data center products" during the coming 12 months.

Investors clearly like the cost-cutting talk as Extreme's stock is up by $0.17, a full 5 percent, to $3.57 in pre-market trading early Friday.

— Ray Le Maistre, International Managing Editor, Light Reading