Struggling vendor DragonWave said it cut its senior management positions by one-third and made changes to its agreement with Nokia Siemens Networks to reduce operating expenses.
DragonWave did not say which or how many positions it cut, but said it would give an update on its cost reductions during its next quarterly earnings announcement. Additionally, Nokia Siemens said it will give DragonWave an immediate cash payment of around $13.9 million.
DragonWave and NSN also ended their Italian services agreement, which launched June 2012 and involved NSN providing research and development and other services to DragonWave. As a result, DragonWave expects to cut operating costs by around $4 million per quarter. DragonWave also said it expects to pay a termination fee totaling around $9.1 million over the course of its fiscal year 2014.
DragonWave has struggled over the past couple of years due to heavy reliance on Clearwire (NASDAQ:CLWR); Clearwire curtailed its investments in microwave backhaul when it stopped rolling out its WiMAX network in preparation for a migration to TD-LTE.
DragonWave bought most of its microwave transport business last year from NSN, and DragonWave is also the preferred strategic supplier of packet microwave and related products to NSN. DragonWave has used the deal to keep it afloat. In its statement today, DragonWave said that it has rebranded the products acquired from Nokia Siemens as "Harmony" products and will continue the support and development of these products. DragonWave said the products will continue to be sold through NSN.
In early March, DragonWave lowered revenue expectations for its fourth quarter for the fiscal year 2013, which ended February 28, 2013, to around $30 million. The company said main area of shortfall was lower revenue from NSN during the period compared to the fiscal third quarter.
In the third quarter, DragonWave lost $13.9 million on revenue of $38.5 million. One year earlier, DragonWave reported a loss of $8 million on revenue of $11.8 million.
For more:
- see this release
- see this Reuters article
- see this Ottawa Citizen article
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