plans to cut its workforce by 30% and undertake other cost-cutting initiatives to restructure its business, just days after the company unleashed
another wave of bad news.
Enterasys, which was formed from the breakup of Cabletron, said its workforce will be reduced to about 1,700 employees after the job cuts, most of which will take place this week. The company's shares were up 16 cents, or 11.9%, to $1.50.
The company said its restructuring plan also includes other cost-saving programs, as well as lower capital expenditures and reductions in working capital. The networking systems maker has been burning through cash at a rapid pace and said Friday that it expects its cash level to decline by $70 million in the first quarter.
"We are committed to achieving a successful turnaround so that Enterasys can once again be a prosperous and growing company," William K. O'Brien, the company's interim chief executive, said in a press release. "The cost-cutting initiatives are an important first step designed to achieve cash break-even as soon as possible. We are continuously evaluating additional business improvement opportunities to increase sales effectiveness and reduce costs."
Shares of Enterasys plunged 68% Friday to $1.34 after the company said fourth- and first-quarter revenue would fall below expectations. In addition, the company announced that its CEO, Enrique P. Fiallo, had resigned along with two other senior executives.
Enterasys, which said it wouldn't file its annual report prior to the April 15 deadline, also said that it may have to restate previous quarters to reflect revenue adjustments.
On Feb. 1, the company said it would delay reporting its results for the fourth quarter to review a $4 million sales contract booked in the Asia-Pacific region. The company is under investigation by the
Securities and Exchange Commission
for what it has described as an "apparently unrelated" matter.