Boingo Wireless disclosed last week that it was eliminating about 80 positions, or 16% of its workforce, as part of a restructuring designed to increase profitability.
The company revealed in a Securities and Exchange Commission filing that it expects to record a restructuring charge during the quarter ended Dec. 31, 2019, of about $2.2 million, primarily related to employee severance and benefit costs. Affected employees already have received notification.
In a statement, the company said its business has changed significantly over the past few years, with the growth of distributed antenna systems (DAS), carrier offload, and the building-out of coverage on military bases and in multifamily dwelling units. Yet key parts of the organization were still aligned around what it considers “legacy” products, like retail Wi-Fi and advertising.
“To help drive longer-term revenue and profitability, we are reorganizing the business into ‘core’ and ‘legacy’ business units,” the statement said. “Core products include Carrier Services (DAS, Offload, 5G, CBRS), Military and Multifamily. These are areas where we will continue to focus and invest. Legacy products will be managed to maximize profitability with minimal incremental investment.”
The reorganization around core products led to the reduction in the workforce. “While we will recognize cost savings as a result, the primary reason behind the reduction in force is the business alignment to focus our resources on selling services to the carriers, the military and a growing multifamily business,” the company said. “While this difficult step was a necessary one, it will not impact our strategy of continuing to acquire key strategic venues to monetize with our carrier services technologies. We remain committed to investing in the core areas of our business.”
A source close to the company’s operations who asked to remain anonymous indicated morale is low—and certainly not improving as layoffs were announced just before the holidays—and said key roles haven’t been filled at the company. A company spokesperson disputed that, however, saying it’s adding a number of roles that are “aligned with its core products and services.”
Earlier this year, the company named Mike Finley, a former Qualcomm executive who served on Boingo’s board, to replace CEO Dave Hagan, who retired after 17 years with the company.
The company’s shares closed at $11.42 on Friday, which is lower than its $13.50 share price for its 2011 IPO. In its last quarterly report, the company reported revenue of $64.7 million, a decrease of 0.8% compared to $65.3 million in the third quarter of 2018. DAS revenue decreased compared to the year-ago quarter, while military and multifamily revenue increased 8.7%.
The military and multifamily divisions are relatively new for the company. Last year, Boingo acquired Elauwit Networks, which it said was complementary to its Wi-Fi business. Elauwit provides high-speed Wi-Fi to properties across the United States, the vast majority of which are student housing.