Ed Meyercord, Extreme Networks’ new CEO, got down to business Thursday morning, giving investors and analysts details about a restructuring plan that will involve layoffs of 285, about 18 percent of the company.
Beyond simple cost-cutting, Meyercord’s plan aims to raise the status of Extreme, which has become a perennially small player in the world of enterprise networking.
Meyercord became CEO last month as part of a rather “extreme” shuffling of executives. But he said the plan he described is the result of a study the company began back in January. Here are a few key moves he described on Thursday.
As noted, about 18 percent of the company is being let go. Nearly all of the layoffs have already taken place, executives said on Thursday’s call.
Extreme expects to rack up restructuring charges of $13 million to $15 million for its fourth quarter, which ends in June. The cuts will save $40 million in operating costs in fiscal 2016, Extreme says.
2. Bundling Wired and Wireless
Admitting that “the Ethernet market for modular and fixed switches is in modest decline,” Meyercord said it’s time to start selling more than individual boxes. “Extreme cannot compete solely as a supplier of wired switches,” he said.
Rather, he said the company needs to sell its products in groups: wireless, wireline, management, policy control, analytics, and so on.
Some customers already buy wired and wireless equipment from Extreme, but they represent a minority, Meyercord said. Most customers aren’t even aware that Extreme sells enterprise WiFi products, he said.
So, part of the company’s restructuring will include a rebranding effort. Extreme will also be making more use of the reseller channel, replacing certain “field forces that frankly weren’t profitable,” Meyercord said.
Among the industry trends Extreme can look forward to: a refresh of switches when 802.11ac Wave 2 reaches enterprises. The company is anticipating this, with revenues expected to start arriving mid-2016, Meyercord said.
3. Using Off-the-Shelf Chips, Not ASICs
The axe didn’t just hit employees. Some projects got the boot as well.
“There are a fair number of what we would consider to be very long-term and expensive projects to develop proprietary hardware platforms,” Meyercord said, adding that it’s not clear these projects can provide the return Extreme needs.
The statement would seem to imply that Extreme is going to start using off-the-shelf chips more and ASICs less. Asked by an analyst if that’s the case, Meyercord said, “You’re headed in the right direction in the way you’re thinking about it.”
Photo: Extreme Networks at Interop in Vegas earlier this month.