SPIT Bits: Job Cuts in Hard Times

The mobile device sector might be attracting the job-cut headlines currently as pressures mount at Nokia Corp. (NYSE: NOK) and BlackBerry , but the Service Provider Information Technology (SPIT) sector is also feeling the heat of reduced carrier capex and project delays. (See RIM Delays BlackBerry 10 Phones 'Til 2013, More Job Cuts at RIM and Nokia Cuts 10,000 Jobs, Restructures.)

  • Canadian test gear and service assurance software specialist EXFO (Nasdaq: EXFO; Toronto: EXF) is cutting 100 jobs and reducing some "discretionary spending" to find US$9 million in annual savings after its fiscal third-quarter revenues fell 12 percent year-on-year to $59.5 million. A combination of lower sales and reduced gross margins -- 60.4 percent compared with 64.2 percent a year ago -- resulted in a net loss of $3.9 million for the three-month period that ended May 31. The staff cuts, which will leave the company with about 1,700 employees, will result in a one-time cost of about $3 million, much of which will be booked during the current fiscal quarter. EXFO, which saw its share price dip 6 percent to close at $4.99 Friday, expects trading conditions to improve during the second half of the calendar year and believes its sales dip is the result of project delays rather than cancellations. (See EXFO Reports $3.9M Loss in Q3, EXFO Unveils Ethernet One, EXFO Adds 100G PMD Source, EXFO Aids VoLTE Tests and EXFO Offers Apps, Tackles Burst Testing.)

  • Finland's Comptel Corp. (Nasdaq, Helsinki: CTL1V) is another SPIT vendor looking to reduce its cost base. As part of a plan to cut its operating expenses by €10 million ($12.7 million), it is cutting an unspecified number of OSS development jobs at its site in Norway, a move that will account for €2 million ($2.5 million) of the planned cost reductions. The company, which currently employs about 700 staff, is still expecting its annual revenues to increase by about 10 percent this year to around €84 million ($106 million), but its operating profits before one-time costs are now set to be lower than earlier predicted, at no more than 5 percent of revenues. Comptel is keen to expand beyond its traditional boundaries to find new sources of revenues and earlier this year acquired Xtract to give it a foothold in the increasingly important advanced analytics sector. (See Comptel Cuts Some R&D Staff in Norway, Comptel Under the Cosh and Comptel to Buy Xtract for €3.1M.)

  • Although around 2,500 Convergys Information Management (IM) staff have joined Netcracker Technology Corp. following the $449 million acquisition, not everyone made the move to the NEC subsidiary. NetCracker Vice President of Strategy Sanjay Mewada confirmed to Light Reading recently that "a number" of the top managers from Convergys IM did not join the company. "That's the nature of these things. There are always overlaps and duplications but it hasn't eroded the value of the deal." (See NEC to Buy Convergys Unit for $449M and NEC Completes Convergys Unit Acquisition.)

    In other news of note from the telecom software sector:

    — Ray Le Maistre, International Managing Editor, Light Reading

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