Openwave Cuts Staff as Losses Mount
The company just reported fiscal fourth-quarter revenues of US$35.2 million, down 19 percent compared with a year ago and its fourth consecutive quarter of declining sales. The company has also experienced increased operating losses, with the fiscal fourth-quarter's operating loss reaching $10.6 million. Its net loss was just short of $8 million, or 9 cents per share.
Openwave is in transition mode, trying to shake its reliance on its legacy messaging gateways and increase sales of its new Service Provider Information Technology (SPIT) products, such as: Amplicity, its browser-based mobile app development platform; Integra, its mediation platform; Passport, its policy-friendly tiered charging system; and its Media Optimizer system for video traffic management. (See OpenWave Amps Up Browser Apps, Sprint Tackles Browser-Based Apps and Openwave Shows Its Passport.)
It's had some success with its new products, and has been developing multiple industry partnerships to help get those products to new customers, but its efforts haven't delivered growth to date. As CEO Ken Denman noted in the company's earnings call late Monday, "the market is developing more slowly than we had expected." (See OpenWave Amps Up Browser Apps, Openwave, F5 Team on Policy, Openwave Teams With GetJar , Juniper Launches MobileNext and More, Bouygues Manages 3G Traffic With Openwave, Telefónica Deploys Openwave Integra and du Picks Openwave.)
So in an effort to stem its losses the company is cutting its headcount, a move it believes will reduce its annual operating expenses by about $30 million, or 30 percent of its current total. "Our restructuring is designed to allow us to focus on the new products that are gaining traction while reducing our investments in legacy products, realign our R&D to support our narrower portfolio of products and rely more on our channel partners to drive sales," noted Denman is the company's official restructuring statement.
About half of Openwave's 536 staff (as of June 30) are in the Americas, while 184 are in Europe and the rest in Asia/Pacific. There are no indications yet where the headcount axe will fall.
Investors seemed more concerned about the slow traction of the new products than the company's plans to cut its costs as Openwave's share price dipped by about 5 percent to $2.10 in after-hours trading on Nasdaq.
— Ray Le Maistre, International Managing Editor, Light Reading