Welcome!

Virtualization Authors: Liz McMillan, Rex Morrow, Datical, Carmen Gonzalez, Elizabeth White, Pat Romanski

News Feed Item

Extreme Networks Announces a Plan to Reduce Spending by Approximately $7.0 million per quarter, Buys Back 1.9 Million Shares, Updates Fiscal Second Quarter Guidance and Financial Model

SANTA CLARA, Calif., Jan. 3, 2013 /PRNewswire/ -- Extreme Networks, Inc. (Nasdaq: EXTR) today announced a plan to streamline its operations to reduce costs and also provided an updated financial model for Fiscal 2013. The restructuring plan is expected to result in approximately $7.0 million in reduced quarterly costs once the plan is fully implemented. The Company expects to record a charge of approximately $5.5 to $7.0 million in the fiscal quarter ended on December 31, 2012.

Updated Guidance for the Three Months Ending December 31, 2012

The Company revised its guidance for the fiscal second quarter ended December 31, 2012 based on the current business outlook and actions taken:

  • Net Revenue is estimated to be approximately $75 to $77 million, versus the low end of previously provided guidance of $78 million primarily due to delays in customer expenditures in EMEA and the US.
  • Gross Margin (GAAP and Non-GAAP) for FQ2'12 is expected to be approximately 54% to 55%.
  • Operating Expenses (GAAP) are expected to be in a range of $45.5 million to $47.5 million, which is above the range of previously provided guidance primarily due to the restructuring charges of approximately $5.5 to $7.0 million.
  • Operating Expenses (Non-GAAP) are expected to be in a range of $38.1 to $38.6 million, which is below the range of previously provided guidance primarily due to lower than expected headcount costs as well as management actions to reduce expenses.
  • Net Income (GAAP) is expected to be a loss in a range of $4.5 to $7.0 million, which is below the range of previously provided guidance primarily due to lower than expected revenue and the restructuring charges.  Diluted EPS is expected to be a loss in a range of $0.04 to $0.07
  • Net Income (Non-GAAP) is expected to be in a range of $2.5 to $3.0 million, which is below the low-end of the range of previously provided guidance primarily due to lower than expected revenue.  Diluted EPS is expected to be in a range of $0.02 to $0.03


Reported

Prior Guidance

Updated Guidance

Three Months Ended

Three Months Ending

Three Months Ending

September 30, 2012

December 31, 2012

December 31, 2012

Total net revenue

$76.1 million

 $78 to $85 million

~$75 to ~$77 million

Gross margin (GAAP)

53%

55% +/-

~ 54% to ~55%

Gross margin (Non-GAAP)

53%

55% +/-

~ 54% to ~55%

Research & Development and selling, general, and administrative expenses (GAAP)

$37.9 million

Up $2.0 to $3.0 million

Up $7.5 to $9.5 million

Research & development and selling, general, and administrative expenses (Non-GAAP)

$36.1 million

Up $2.5 to $3.5 million

Up $2 to $2.5 million

Net Income – (GAAP)

$12.9 million

$2.5 to $4.0 million

($4.0) to ($6.0) million

Net Income – (Non-GAAP)

$3.5 million

$4.0 to $6.5 million

$2.0 to $3.0 million

Earnings per share (GAAP)

$0.14

$0.02 to $0.05

($0.04) to ($0.07)

Earnings per share (Non-GAAP)

$0.04

$0.04 to $0.07

$0.02 to $0.03

Share Repurchase
The company also announced that it repurchased approximately 1.9 million shares during the quarter ended December 31, 2012 for approximately $6.7 million.

Updated Guidance on the Company's Financial Model Goals
The Company is taking actions to reduce costs to strengthen its long term competitive position in the industry and to help ensure that the Company can achieve its previously stated goal of a quarterly 10% Non-GAAP operating income margin by the end of fiscal 2013.  The Company believes the restructuring plan announced today will allow the Company to achieve its targeted 10% Non-GAAP operating income margin at a revenue level below $80 million and at a gross margin percentage below 56% gross margin range previously outlined in the Company's financial model goals.

Conference Call:
Extreme Networks will host a conference call at 5:00 p.m. Eastern (2:00 p.m. Pacific) today to review its restructuring plan and the updated guidance for fiscal 2013, including significant factors and assumptions underlying the guidance provided above. The conference call will be available to the public through a live audio web broadcast via the Internet at http://investor.extremenetworks.com and a replay of the call will be available on the website through January 13, 2013. The conference call may also be heard by dialing (877) 303-9826 (international callers' dial (224) 357-2194). 

Non-GAAP Financial Measures
Extreme Networks provides all financial information required in accordance with generally accepted accounting principles (GAAP).  To supplement financial information presented in accordance with GAAP, the company is also providing with this press release Non-GAAP financial information, including product gross margin, research and development and selling, general, and administrative expenses, and earnings/loss per share.  In preparing Non-GAAP information, the company has excluded, where applicable, the impact of restructuring charges and share-based compensation.  The company believes that excluding these items provides both management and investors with additional insight into its current operations, the trends affecting the company and marketplace performance.  In particular, management finds it useful to exclude these items in order to more readily correlate the operating activities with the ability to generate cash from operations.  Accordingly, management uses these Non-GAAP measures, along with the comparable GAAP information, in evaluating historical performance and in planning future business activities.  Please note that the company's Non-GAAP measures may be different than those used by other companies.  The additional Non-GAAP financial information that is presented should be considered in conjunction with, and not as a substitute for, financial information presented in accordance with GAAP.   Extreme Networks uses both GAAP and Non-GAAP measures to evaluate and manage its operations.

About Extreme Networks
Extreme Networks is a technology leader in high performance Ethernet switching for cloud, data center and mobile networks.  Based in Santa Clara, CA, Extreme Networks has more than 6,000 customers in more than 50 countries. For more information, visit the company's website at http://www.extremenetworks.com

Extreme Networks and the Extreme Networks logo are registered trademarks of Extreme Networks, Inc. in the United States and/or other countries.

Forward Looking Statements:
Extreme Networks has based the preceding guidance for the three months ending December 31, 2012 on expectations, assumptions and estimates that the Company believes are reasonable given its assessment of historical trends and other information reasonably available as of December 31, 2012. The guidance consists of predictions only, however, and is subject to a wide range of known and unknown business risks and uncertainties, many of which are beyond the control of the Company, but including in particular changes that may arise in the closing process for the second quarter, including changes in the estimate of the restructuring charges. The forecasts and projections contained in the table above should not be regarded as representations by Extreme Networks that the estimated results will be achieved. Projections and estimates are necessarily speculative in nature and actual results may vary materially from the guidance provided today. The Non-GAAP guidance presented above is consistent with the presentation of Non-GAAP results as reported in our October 31, 2012 press release covering Extreme Networks' first quarter 2012 results.

The guidance set forth in the above table should be read together with the information contained in the Company's Annual Report on Form 10-K for the year ended June 30, 2012, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and our other Securities and Exchange Commission filings. The Company undertakes no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein, to reflect future events or circumstances.

SOURCE Extreme Networks, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories

SUNNYVALE, Calif., Oct. 20, 2014 /PRNewswire/ -- Spansion Inc. (NYSE: CODE), a global leader in embedded systems, today added 96 new products to the Spansion® FM4 Family of flexible microcontrollers (MCUs). Based on the ARM® Cortex®-M4F core, the new MCUs boast a 200 MHz operating frequency and support a diverse set of on-chip peripherals for enhanced human machine interfaces (HMIs) and machine-to-machine (M2M) communications. The rich set of periphera...

WebRTC defines no default signaling protocol, causing fragmentation between WebRTC silos. SIP and XMPP provide possibilities, but come with considerable complexity and are not designed for use in a web environment. In his session at Internet of @ThingsExpo, Matthew Hodgson, technical co-founder of the Matrix.org, will discuss how Matrix is a new non-profit Open Source Project that defines both a new HTTP-based standard for VoIP & IM signaling and provides reference implementations.
SYS-CON Events announced today that Aria Systems, the recurring revenue expert, has been named "Bronze Sponsor" of SYS-CON's 15th International Cloud Expo®, which will take place on November 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Aria Systems helps leading businesses connect their customers with the products and services they love. Industry leaders like Pitney Bowes, Experian, AAA NCNU, VMware, HootSuite and many others choose Aria to power their recurring revenue business and deliver exceptional experiences to their customers.
The Internet of Things (IoT) is going to require a new way of thinking and of developing software for speed, security and innovation. This requires IT leaders to balance business as usual while anticipating for the next market and technology trends. Cloud provides the right IT asset portfolio to help today’s IT leaders manage the old and prepare for the new. Today the cloud conversation is evolving from private and public to hybrid. This session will provide use cases and insights to reinforce the value of the network in helping organizations to maximize their company’s cloud experience.
The Internet of Things (IoT) is making everything it touches smarter – smart devices, smart cars and smart cities. And lucky us, we’re just beginning to reap the benefits as we work toward a networked society. However, this technology-driven innovation is impacting more than just individuals. The IoT has an environmental impact as well, which brings us to the theme of this month’s #IoTuesday Twitter chat. The ability to remove inefficiencies through connected objects is driving change throughout every sector, including waste management. BigBelly Solar, located just outside of Boston, is trans...
SYS-CON Events announced today that Matrix.org has been named “Silver Sponsor” of Internet of @ThingsExpo, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Matrix is an ambitious new open standard for open, distributed, real-time communication over IP. It defines a new approach for interoperable Instant Messaging and VoIP based on pragmatic HTTP APIs and WebRTC, and provides open source reference implementations to showcase and bootstrap the new standard. Our focus is on simplicity, security, and supporting the fullest feature set.
Predicted by Gartner to add $1.9 trillion to the global economy by 2020, the Internet of Everything (IoE) is based on the idea that devices, systems and services will connect in simple, transparent ways, enabling seamless interactions among devices across brands and sectors. As this vision unfolds, it is clear that no single company can accomplish the level of interoperability required to support the horizontal aspects of the IoE. The AllSeen Alliance, announced in December 2013, was formed with the goal to advance IoE adoption and innovation in the connected home, healthcare, education, aut...
SYS-CON Events announced today that Red Hat, the world's leading provider of open source solutions, will exhibit at Internet of @ThingsExpo, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Red Hat is the world's leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As the connective hub in a global network of enterprises, partners, a...
The only place to be June 9-11 is Cloud Expo & @ThingsExpo 2015 East at the Javits Center in New York City. Join us there as delegates from all over the world come to listen to and engage with speakers & sponsors from the leading Cloud Computing, IoT & Big Data companies. Cloud Expo & @ThingsExpo are the leading events covering the booming market of Cloud Computing, IoT & Big Data for the enterprise. Speakers from all over the world will be hand-picked for their ability to explore the economic strategies that utility/cloud computing provides. Whether public, private, or in a hybrid form, clo...
Software AG helps organizations transform into Digital Enterprises, so they can differentiate from competitors and better engage customers, partners and employees. Using the Software AG Suite, companies can close the gap between business and IT to create digital systems of differentiation that drive front-line agility. We offer four on-ramps to the Digital Enterprise: alignment through collaborative process analysis; transformation through portfolio management; agility through process automation and integration; and visibility through intelligent business operations and big data.
The Transparent Cloud-computing Consortium (abbreviation: T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data processing High speed and high quality networks, and dramatic improvements in computer processing capabilities, have greatly changed the nature of applications and made the storing and processing of data on the network commonplace.
Be Among the First 100 to Attend & Receive a Smart Beacon. The Physical Web is an open web project within the Chrome team at Google. Scott Jenson leads a team that is working to leverage the scalability and openness of the web to talk to smart devices. The Physical Web uses bluetooth low energy beacons to broadcast an URL wirelessly using an open protocol. Nearby devices can find all URLs in the room, rank them and let the user pick one from a list. Each device is, in effect, a gateway to a web page. This unlocks entirely new use cases so devices can offer tiny bits of information or simple i...
Things are being built upon cloud foundations to transform organizations. This CEO Power Panel at 15th Cloud Expo, moderated by Roger Strukhoff, Cloud Expo and @ThingsExpo conference chair, will address the big issues involving these technologies and, more important, the results they will achieve. How important are public, private, and hybrid cloud to the enterprise? How does one define Big Data? And how is the IoT tying all this together?
The Internet of Things (IoT) is going to require a new way of thinking and of developing software for speed, security and innovation. This requires IT leaders to balance business as usual while anticipating for the next market and technology trends. Cloud provides the right IT asset portfolio to help today’s IT leaders manage the old and prepare for the new. Today the cloud conversation is evolving from private and public to hybrid. This session will provide use cases and insights to reinforce the value of the network in helping organizations to maximize their company’s cloud experience.
TechCrunch reported that "Berlin-based relayr, maker of the WunderBar, an Internet of Things (IoT) hardware dev kit which resembles a chunky chocolate bar, has closed a $2.3 million seed round, from unnamed U.S. and Switzerland-based investors. The startup had previously raised a €250,000 friend and family round, and had been on track to close a €500,000 seed earlier this year — but received a higher funding offer from a different set of investors, which is the $2.3M round it’s reporting."
The Industrial Internet revolution is now underway, enabled by connected machines and billions of devices that communicate and collaborate. The massive amounts of Big Data requiring real-time analysis is flooding legacy IT systems and giving way to cloud environments that can handle the unpredictable workloads. Yet many barriers remain until we can fully realize the opportunities and benefits from the convergence of machines and devices with Big Data and the cloud, including interoperability, data security and privacy.
All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. Over the summer Gartner released its much anticipated annual Hype Cycle report and the big news is that Internet of Things has now replaced Big Data as the most hyped technology. Indeed, we're hearing more and more about this fascinating new technological paradigm. Every other IT news item seems to be about IoT and its implications on the future of digital busines...
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water, are pursuing SmartGrid initiatives that represent one of the more mature examples of SAE. We have s...
The Internet of Things needs an entirely new security model, or does it? Can we save some old and tested controls for the latest emerging and different technology environments? In his session at Internet of @ThingsExpo, Davi Ottenheimer, EMC Senior Director of Trust, will review hands-on lessons with IoT devices and reveal privacy options and a new risk balance you might not expect.
IoT is still a vague buzzword for many people. In his session at Internet of @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, will discuss the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. The presentation will also discuss how IoT is perceived by investors and how venture capitalist access this space. Other topics to discuss are barriers to success, what is new, what is old, and what the future may hold.