Riverstone Networks Inc. Thursday said it will cut 160 positions, or 30 percent of its staff, due to weaker than expected second quarter results.
The company said it expects revenues and earnings for its second quarter ending Aug. 31, 2002, to be sharply lower than analyst expectations. The company is anticipating revenue of approximately US$10 million to $15 million, less than half of the $30 million Wall Street was expecting.
Based on these revenues, Riverstone expects to record a pro forma loss of approximately $0.18 to $0.24 per share. Wall Street anticipated a pro forma loss of $0.11 per share.
Pro forma results exclude second quarter charges of approximately $5 million for severance expenses and charges associated with excess facilities, as well as amortization of stock compensation expense. With these charges, Riverstone expects a loss of approximately $0.23 to $0.29 per share.
As a result of the disappointing quarter, Riverstone said it would reduce its workforce of 525 by 30 percent. The company also said it will realign to pursue new market opportunities, including cable and the federal government, as well as the corporate enterprise. Riverstone's forte to now has been in selling metro Ethernet aggregation routers to service providers.
"While we remain committed long term to our service provider customers, we are seeing a more immediate opportunity for our products in markets beyond telecommunications services," said Romulus Pereira, president and CEO of Riverstone, in a statement.
Riverstone expects to save $7 million per quarter from the workforce reduction beginning in the third quarter of the current fiscal year.