BMC Software will shed up to 875 employees, about 12 per cent of its global workforce, as part of a plan to reduce costs and improve its bottom line, the systems management software vendor has announced.
The layoffs will result in a pre-tax charge of between $US50 million and $US60 million, most of which BMC will take in the first fiscal quarter of 2006, which ends in June, and the rest in the second and third quarters. BMC expects the workforce reduction to generate annual expense savings of about $US100 million.
Managing director of BMC A/NZ, Paul Williams, confirmed the announcement would see 10 jobs lost in Australia.
He said the reductions would be across all departments of the business.
BMC employed 120 people in this country before the announcement. Based on preliminary estimates for its 2005 fourth quarter, ended March 31, revenue and earnings will fall below expectations provided in February, the company said.
Revenue is now expected to be in the $US388 million to $US400 million range, down from the previous forecast of between $US410 million and $US425 million.
The restructuring also includes a reassessment of investment in its three main product lines - managing mainframes, managing distributed Unix systems and helping companies align IT expenditures with business needs.
BMC planned to increase investments in the latter business, which it calls service management, because it was growing and had good margins, BMC president and CEO, Robert Beauchamp, said.
This service management business included its Remedy, Magic and Marimba product lines.
The mainframe management product business, which includes the Mainview line, is highly profitable and generates significant cash flow. BMC would invest in it to maintain those trends, while also recognising that this business' revenue was expected to be flat or decline slightly across the industry, Beauchamp said.
BMC's distributed system management product business, which includeds the Patrol line, wasn't profitable overall and its results fell below expectations, Beauchamp said.
The company planned to cut costs in this business, and expected that it would be helped with the introduction of new products based on agentless technology next year, he said.
"The goal of the restructuring efforts is to take immediate action to significantly improve the profitability of the company," Beauchamp said. "The restructuring will also allow us to increase investment in our growth businesses, primarily our service management business."