Crn21 1200 300.jpeg

After almost doubling in size last year, cost-conscious Mitel is shrinking

After seeing its bid to buy Polycom thwarted, Mitel has sold its mobile division and is now gearing up to chop 10 per cent of its remaining workforce

Mitel took another step in its mission to get more trim and focused last night as it announced plans to chop ten per cent of its workforce.

The comms giant was close to doubling in size last year thorough its proposed acquisition of Polycom, until the deal was torpedoed by a higher bid.

Now, the emphasis for the NASDAQ-listed firm has shifted to getting lean (although one of its executives hinting to us that it is still look to acquire again).

In February, Mitel completed the sale of its mobile division to the parent company of Xura, saying it would use the $350m cash proceeds to pay down its credit facility. This reflected its strategy to focus on the unified communications and collaboration market, the Canadian firm said.

But Mitel ramped things up last night by announcing in its Q1 results that it plans to trim 10 per cent of its workforce as part of cost reduction actions designed to save $30m a year.

This will result in it taking a charge in the range of $25m to $35m this year, Mitel chief executive Richard McBee said.

"With the mobile divestiture behind us we are taking proactive cost reduction actions to align our operating expenses with our current and future business investment needs," McBee said.

Despite the cost-cutting, McBee said he was "pleased" with the Q1 results, and "especially pleased" with Mitel's performance in its larger European markets "where Mitel's financial strength helps us to expand on our leadership position in the region".

However, Mitel's GAAP net losses widened year on year during the quarter ending 31 March 2017, from $12.9m to $19.7m, on revenues that fell slightly from $228.1m to $223.1m.