Madge Networks has announced a loss for the third quarter running, after months of restructuring.
The company made a net loss of $62.7 million (#39.2 million) for the fiscal third quarter, ending September 30, and reported revenues of $83.2 million for the period, down from $112.2 million for the same time last year.
Excluding non-recurring charges the loss was $14 million compared to a net loss of $6.7 million last year. The last time that the company broke even was in the fourth quarter of 1996.
Richard Zambuni, vice president of corporate marketing at Madge, put the increased losses down to uncertainty as a result of restructuring.
"It was largely due to a drop in sales caused by the upheaval of the restructure," he explained. "We put it down to internal issues, such as staff motivation, rather than the market."
The non-recurring charges of $48.7 million include the severance planned for the 25% reduction in workforce, announced as part of the restructuring plans in late July. The loss also includes charges for inventory write-downs although the company refused to specify what slow moving products are targeted.
Madge is now split into four new operational units: Token Ring, Ethernet, video networking and carrier ISDN, with corporate headquarters moving from Silicon Valley to High Wycombe. "The idea was to get the headquarters of the business back in the same time zone as the major R&D sites in the UK and Israel," said Zambuni. However, the move led to the resignation of the firm's Chief Financial Officer Kevin Evans, who refused to relocate from the US.
Although the company is predicting a loss for the fourth quarter, Zambuni believes the restructuring will move it back into profitability in early 1998. "We knew the restructure would be painful but we now have a specialised sales force and that will bring real benefits to the customers," said Zambuni.
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