Welcome!

Containers Expo Blog Authors: Elizabeth White, Scott Sobhani, Liz McMillan, John Esposito, 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
Connected devices and the industrial internet are growing exponentially every year with Cisco expecting 50 billion devices to be in operation by 2020. In this period of growth, location-based insights are becoming invaluable to many businesses as they adopt new connected technologies. Knowing when and where these devices connect from is critical for a number of scenarios in supply chain management, disaster management, emergency response, M2M, location marketing and more. In his session at @Th...
The cloud market growth today is largely in public clouds. While there is a lot of spend in IT departments in virtualization, these aren’t yet translating into a true “cloud” experience within the enterprise. What is stopping the growth of the “private cloud” market? In his general session at 18th Cloud Expo, Nara Rajagopalan, CEO of Accelerite, explored the challenges in deploying, managing, and getting adoption for a private cloud within an enterprise. What are the key differences between wh...
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
SYS-CON Events announced today that Bsquare has been named “Silver Sponsor” of SYS-CON's @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. For more than two decades, Bsquare has helped its customers extract business value from a broad array of physical assets by making them intelligent, connecting them, and using the data they generate to optimize business processes.
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his Day 2 Keynote at @ThingsExpo, Henrik Kenani Dahlgren, Portfolio Marketing Manager at Ericsson, discussed how to plan to cooperate, partner, and form lasting all-star teams to change t...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. Big Data at Cloud Expo - to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is...
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
Machine Learning helps make complex systems more efficient. By applying advanced Machine Learning techniques such as Cognitive Fingerprinting, wind project operators can utilize these tools to learn from collected data, detect regular patterns, and optimize their own operations. In his session at 18th Cloud Expo, Stuart Gillen, Director of Business Development at SparkCognition, discussed how research has demonstrated the value of Machine Learning in delivering next generation analytics to imp...
There are several IoTs: the Industrial Internet, Consumer Wearables, Wearables and Healthcare, Supply Chains, and the movement toward Smart Grids, Cities, Regions, and Nations. There are competing communications standards every step of the way, a bewildering array of sensors and devices, and an entire world of competing data analytics platforms. To some this appears to be chaos. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, Bradley Holt, Developer Advocate a...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
SYS-CON Events announced today that ReadyTalk, a leading provider of online conferencing and webinar services, has been named Vendor Presentation Sponsor at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. ReadyTalk delivers audio and web conferencing services that inspire collaboration and enable the Future of Work for today’s increasingly digital and mobile workforce. By combining intuitive, innovative tec...
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...
industrial company for a multi-year contract initially valued at over $4.0 million. In addition to DataV software, Bsquare will also provide comprehensive systems integration, support and maintenance services. DataV leverages advanced data analytics, predictive reasoning, data-driven diagnostics, and automated orchestration of remediation actions in order to improve asset uptime while reducing service and warranty costs.
Vidyo, Inc., has joined the Alliance for Open Media. The Alliance for Open Media is a non-profit organization working to define and develop media technologies that address the need for an open standard for video compression and delivery over the web. As a member of the Alliance, Vidyo will collaborate with industry leaders in pursuit of an open and royalty-free AOMedia Video codec, AV1. Vidyo’s contributions to the organization will bring to bear its long history of expertise in codec technolo...