DragonWave cuts 25 per cent of workforce, 6 per cent of Ottawa staff, in 'difficult' quarter

Tom Pechloff
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Ottawa-based DragonWave’s fiscal 2016 second quarter was “difficult,” CEO Peter Allen conceded when the company reported its quarterly results earlier this week.

DragonWave's Peter Allen. (Photo by Mark Holleron)

The quarter saw the packet microwave radio system provider trim its overall workforce by 25 per cent. A company spokesperson said the 214 headcount in Ottawa was trimmed by six per cent.

In his first conference call since assuming chief financial officer responsibilities, Patrick Houston told investors the cuts have helped the company reduce operating expenses to about $8 million per quarter.

The firm now has a headcount of just under 200, compared with about 275 one year ago, Mr. Houston said.

“We’ve tried to seek efficiencies in every area of our business, making sure we’ve got our resources focused only on the tasks that are before us as the business evolves and changes,” Mr. Allen told investors, adding that R&D programs were protected “in the areas where we saw immediate growth.”

Revenue declined year-over-year to $26.9 million from $37.9 million for the packet microwave radio system provider. Still, the firm’s quarterly revenue was up slightly from the $26.3 million posted in the first quarter of its fiscal 2016.

Much of the shortfall is due to dwindling revenue from DragonWave’s Nokia channel and a recent glitch in the rollout of its Harmony Enhanced product, a problem Mr. Allen said has now been fixed.

“We are pleased that we have been able to resolve the product issues on our new Harmony Enhanced product and believe this will be a world-class product going forward,” he said in a statement.

As for DragonWave’s relationship with Nokia, Mr. Allen said much remains up in the air.

“I think it’s very difficult to speculate where that relationship will go, and I think it’s difficult for Nokia as well because they haven’t completed the acquisition of Alcatel Lucent and until they do, there are restrictions on how those two companies have to operate independently, so I think until that transaction occurs, substantive dialogue could occur,” he said.

The Nokia channel represented 37 per cent of DragonWave’s total revenue, down from 52 per cent in the previous quarter and 60 per cent in the same three-month period last year.

DragonWave posted a net loss of $21 million or 28 cents per share this quarter, up from $6 million or eight cents per share in the previous quarter and the $8.9 million or 14 cent per share loss in the same quarter in fiscal 2015.

The firm had cash and cash equivalents of $13.1 million, down from $18.9 million at the end of the previous quarter.

Organizations: DragonWave, Nokia, Alcatel Lucent

Geographic location: Ottawa

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