Xtera Slashes Headcount as Liquidity Crunch Intensifies, Say Sources
Less than a year after its IPO, optical technology vendor Xtera Communications is believed to have made major cuts to its headcount as it struggles with a liquidity crisis and seeks fresh investment or an acquisition.
The Allen, Texas-based optical networking stalwart, which became a public company in November 2015, has slashed its staff, according to sources familiar with the company: One person close to developments suggests that its headcount may have been cut from around 100 to just 20. (See Xtera Prices Its IPO.)
An Xtera Communications Inc. (Nasdaq: XCOM) representative told Light Reading last week that the company wouldn't comment on staffing levels because it is in a quiet period before the company's next quarterly earnings report, though that is not due to be published until November or December.
The layoffs follow a decline in fortunes for the company during 2016 that has led to what Xtera describes as its "liquidity challenges."
On August 22, Xtera reported in an SEC filing that Foxconn Electronics Inc. had terminated its manufacturing agreement with the optical equipment firm, due to Xtera's "non-payment of the outstanding accounts receivable."
That disastrous news followed its fiscal third-quarter earnings report on August 11, when the vendor reported an almost 70% year-on-year decline in revenues to just $5.3 million and a net loss of $23.6 million, much worse than the loss of $4.6 million for the same period in 2015.
Its cash situation has also forced it to appeal to its debtors for extension on its loans -- it announced a limited loan waiver to the tune of $1.5 million on August 31 -- and for it to seek "strategic alternatives" that include new funding or a potential sale of the company.
All of this has decimated Xtera's share price. It was at highs of $5.65 in late November 2015. Today it trades at $0.58, although even that is up a little from the lows of $0.35 it hit when the Foxconn termination was announced.
— Dan Jones, Mobile Editor, Light Reading