The restructuring of Madge Networks continued to hammer its financial results in its third quarter, as it changed its chief financial officer and issued shares to gain some working capital.
In the three months to 30 September, Madge made a $62.7 million loss, almost 10 times greater than last year's $6.7 million deficit. This year's figure included a whopping $48.7 million one-off charge covering severance pay, inventory write-downs, asset-related fees and facilities charges.
Turnover was also down, falling to $83.2 million from $112.2 million last year. The company has cut a third off its sales and marketing costs but its losses would still have quadrupled even without the one-off charges.
The company?s corporate relocation from Silicon Valley to the UK was also hampered because vice president and chief financial officer Kevin Evans has refused to relocate to the UK. Denis Pomroy, the board member who was CFO before Evans, will assume the CFO?s responsibilities until a permanent replacement is found.
Chairman and CEO Robert Madge insisted the company has managed the impact of its restructuring well but admitted it is only halfway through the process. ?Over the next quarter we will continue to focus on improving our financial results by reducing expenses and lowering our fixed costs in our manufacturing operations,? he said.
Madge said the company has dismantled its regional structure, simplified operations and cut overheads, handing more responsibility to each division of the company. The company also used shares to gain some working capital and to pay for part of its restructuring - it closed $30 million of four per cent convertible subordinated notes due in the year 2000. The money may also be used to acquire new technology, Madge said.
'VNU Newswire' revealed that Madge would begin restructuring and relocating the company in July, when it began laying off 650 staff.
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