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Enterasys to cut global workforce by 30 per cent

Enterasys to cut global workforce by 30 per cent

Enterasys Networks will reduce its workforce by 30 per cent in a global restructuring.

The reduction will leave Enterasys with about 1,700 employees, according to the statement. The job cuts will be substantially completed this week, it said. The restructuring will also include other cost savings, as well as lower capital expenditures and cuts in working capital.

Enterasys has been hit by questions about accounting both in its Asia-Pacific operation and across the company. It announced the plan to restructure on Friday, after disclosing on Thursday that its CEO, chief operating officer and executive vice president of worldwide marketing had resigned.

The company has said it expects to report net losses for the first quarter to March 30, as well as for the fourth quarter of 2001, ended December 29. It has delayed announcing final results for the fourth quarter and full year 2001 to investigate the accounting questions. The irregularities discovered in the Asia-Pacific region have led to a review of accounting throughout the company. The US Securities and Exchange Commission is also investigating Enterasys.

On Friday, Enterasys announced William O'Brien had been appointed as interim CEO and Yuda Doron as president.

The restructuring is likely to be broad and swift, despite the fact that the company is still searching for a permanent CEO, said T. Peter Andrew, an analyst at brokerage AG Edwards & Sons.

"I wouldn't be surprised if this also involved some product rationalisation, so you might see some of their (non-core) product categories cut to save costs," he added.

An obvious target in this "rationalisation" would be Enterasys's Aprisma Management Technologies subsidiary. The company had planned to spin off the network management software unit in February and delayed that move. However, other businesses, such as the company's VPN (virtual private network) unit, might also be eliminated, Andrew said.


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