Mitel shares drop 9% after Kanata telecom releases Q4 results

Rich McBee
Mitel CEO Rich McBee

Shares of Ottawa-based Mitel plunged on Thursday after the telecom released fourth-quarter results that showed a large uptick in revenue due to last year’s acquisition of competitor ShoreTel.

Mitel CEO Rich McBee said the “heavy lifting” of absorbing ShoreTel is “well advanced” and that he now expects to see $75 million in cost savings by combining the two organizations within two years.

The three-month period that ended Dec. 31 was Mitel’s first full quarter following the acquisition. It reported revenues of $356 million, up 37 per cent year-over-year.

The firm reported an adjusted profit of $33.1 million, up from $27.3 million a year earlier.

Despite the large stock price plunge, Thursday’s losses failed to fully erode the gains in Mitel’s share price recorded since mid-February. On the Toronto Stock Exchange, Mitel shares rose from $10.43 on Feb. 12 to $11.70 on Feb. 21.

The company’s shares were down 9.1 per cent, or $1.06, to $10.64 on Thursday.