Less than a month after reporting its second loss in the past three quarters, data analysis software vendor Hyperion Solutions today announced plans to cut up to 15 percent of its 2,600-plus workers by the end of June and said it's also taking other steps to reduce spending.
The cutbacks are being driven by the continued economic sluggishness and the effect that's having on software purchases by corporate users, according to officials at the Sunnyvale, Calif.-based company.
"We're taking these steps because of the continuing slowdown in the U.S. economy and to improve the performance of our company," said Hyperion CEO Jeff Rodek in a statement. "These circumstances require that we move fast to make hard but prudent business decisions."
Hyperion spokesman Robert Schettino said the company, which had 2,651 employees at the end of March, has yet to determine the exact number of workers that will be let go. The layoff process could take several weeks in order to comply with the laws of the various countries in which Hyperion has offices, Schettino said. But he added that the company wants to have all the cuts completed by the end of its fiscal year on June 30.
The cutback plans also include a hiring freeze, travel restrictions and a reduction in capital spending except on projects that promise to deliver "large, quick returns on investment," Hyperion announced. Rodek said he's still confident about the company's long-term future, "although that confidence doesn't negate the need to rebalance our business."
Today's announcement comes three weeks after Hyperion disclosed that it lost US$1.3 million in its fiscal third quarter ended March 31. That plunged the company back into the red after it had reported a second-quarter profit and prompted Rodek to say he was "disappointed in our results."
Total revenue increased 4% over last year's third quarter, amounting to $130.2 million. But new software sales dropped from the year-earlier level of $62.2 million to $55.1 million. As part of the loss announcement, Rodek blamed the sales drop-off on reductions in planned IT spending by users due to the softening economy.
"Many potential customers were reluctant to execute contracts even though they had selected our [software]," Rodek said. Hyperion executives had become more vigilant about managing the company's operating expenses and were in the process of "actively assessing our business model, product mix, distribution strategies and productivity levels," he added.
Hyperion held its annual user conference the same week that it reported the third-quarter results. At the conference, the company detailed plans to roll out new repository technology as an add-on to its Essbase online analytical processing software, saying the repository would let users access and analyze data from a variety of systems.