RSA Security Inc. Thursday announced plans to lay off about 15 percent of its staff, cut employee salaries by 10 percent and trim some business units, as the company was hit hard by a slowing global economy in its third fiscal quarter.
RSA generated US$62.6 million in revenue for its third quarter ending Sept. 30, the company said in a statement. This figure compares to $72.0 million in revenue from the same period last year.
Overall, the security specialist posted a net loss of $5.4 million or $0.10 per share from its core business in the third quarter. Including its RSA Capital operations and one-time corporate charges, the company lost $15.5 million.
The company generated $10.2 million or $0.16 per share in net income in its third quarter last year.
RSA predicted a loss for the period in a mid-quarter update earlier this month, estimating at the time that it would be between $12.5 million and $14.1 million. The company also cut 8 percent of its workforce in the third quarter.
Analysts polled by Thomson Financial/First Call predicted RSA would lose $0.07 per share in its third quarter, excluding one-time charges.
"I am disappointed with our results, but they clearly were affected by forces beyond our control," said Arthur Coviello Jr., chief executive officer at RSA, in a conference call with press and analysts. "It is clear we need to take immediate actions to achieve profitability as soon as possible."
U.S. employees will be laid off early next week and international workers will be let go "shortly thereafter," Coviello said. In addition, RSA plans to trim salaries by 10 percent across the board and will delay any merit-based increases for at least six months.
The company saw customers delay purchases and reduce the size of some deals in the quarter due to overall slower spending in the technology sector and the fallout from the Sept. 11 attacks on the U.S., Coviello said. Financial institutions, one of RSA's largest customer segments, were hit hard by the attacks, he said.
To help offset some of these losses, RSA will also wind down its RSA Capital segment, which is made of its New and Emerging Security Technologies (NEST) group and the RSA Ventures investment arm. Over the next three quarters, the NEST group will be merged into the company's core business operations, and effective immediately the company will place a moratorium on investments in NEST.
For its fourth quarter, RSA expects to pull in between $63 million and $65 million in revenue, which translates to a loss of between $0.15 per share and $0.17 per share, including unusual charges, according to a statement. In its core business, the company expects its fourth-quarter results to fall in a range between breakeven and $0.02 per share profit.