Westell is going to lay off employees at two of its key facilities and abandon the development of its ClearLink distributed antenna system (DAS) in an effort that it said will enable it to cut $11 million in annual expenses.
Set to be completed by the end of next march, Westell plans to reduce its workforce and consolidate its Manchester, New Hampshire, and Aurora, Illinois, facilities.
In the process of conducting the layoffs, Westell said it expects to incur about $4.4 million in record charges. These charges consist of estimated cash payments for severance of $0.6 million and purchase commitments of $0.6 million, and non-cash charges of approximately $1.2 million for facility-related costs and approximately $2.0 million for inventory and fixed asset write-offs.
“To accelerate our path to profitable growth and positive cash flow, we are taking actions to significantly lower our cost structure including, based on our latest analysis of the market and expected return, ceasing development of ClearLink DAS,” said Tom Gruenwald, Chairman, CEO, and President of Westell Technologies, in a release. “Westell will continue as a leading supplier of Repeaters, DAS Conditioners, Antennas, and System Components to the IBW market.”
As it heads into fiscal 2017, Westell has expanded from two to three segments:
- In-Building Wireless (IBW): The segment remains unchanged and will continue to include Repeaters, DAS Conditioners, Antennas and System Components.
- Intelligent Site Management and Services (ISMS): Formerly part of the Communication Solutions Group (CSG) segment, ISMS includes ISM Remote units, the ISM Optima network management system, and Westell’s Services business.
- Communication Network Solutions (CNS): Also formerly part of CSG, CNS includes Outside Plant Solutions (e.g., Integrated Cabinets, Power Distribution) and Cell Site Optimization (i.e. Tower Mounted Amplifiers).
Westell’s struggles with its DAS aren’t isolated to this quarter alone.
During the fourth-quarter, Westell reported that its in-Building Wireless (IBW) segment had its weakest quarter of the fiscal year. The company attributed that to an industrywide migration away from standalone DAS conditioners toward integrating those functions into larger network elements.
By developing the ClearLink DAS platform, Westell hoped to gain an additional million dollar source of DAS revenues by the end of 2016.
While it has struggled with DAS revenues, Westell continues to find revenue fortunes in its Communications Solutions Group (CSG) segment. The company continues to see increases in integrated cabinet sales to telcos that are participating in the FCC's CAF II program to extend broadband to rural areas.
Westell won’t release its earnings until August 11, but the vendor has forecast first quarter 2017 revenues of $14.8 million, a year-over-year decline from $21.6 million in the same quarter a year ago and sequentially from $20.9 million.
- see this release
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