After spending much of last year restructuring, IP gear-maker Sonus Networks has done it again.
The Massachusetts-based company, which develops session border controllers and other hardware, as well as software, said this week it’s laying off 12 people, or 1 percent of its workforce. Sonus also will close offices in Ottawa, Canada and Darmstadt, Germany, and move its Freehold, N.J., facility to a smaller building. About 1,200 workers will be left when the reorganization is done.
"These initiatives follow the restructuring activities we undertook last year and are consistent with our ongoing efforts to further strengthen Sonus' operating efficiencies and more closely align the company's cost structure with our market opportunities," Richard Nottenburg, Sonus president and CEO, said in a prepared statement. Nottenburg is stepping down from Sonus by next March; he made the announcement in May.
Sonus expects to save about $2 million per year from the layoffs and office closings, and take a $3.5 million or $4 million charge in the second half of this year for severance costs, lease terminations and other restructuring expenses.
This latest change for Sonus comes a few weeks after the company posted a $300,000 profit, a hair under a penny per share, on lower revenue of $61.2 million. The results barely exceeded Wall Street’s forecasts. The restructuring announcement also could fuel the speculation that Cisco Systems Inc. plans to buy the smaller Sonus. Sonus boasts just more than $400 million in cash, and holds no debt, but the company seems to be slogging through the recession like the rest of the communications industry – a new, larger parent could be just what Sonus needs to keep its R&D edge.
Such a takeover also could reassure communications service providers that Sonus equipment will be available and maintained for years to come.
Cisco would benefit, too, of course. The tech bellwether would reap the benefits of what institutional trading firm Miller Tabak on Friday called Sonus’ “pristine balance sheet," and snag an A-list client roster. That list includes Level 3 Communications Inc., BT Group, KDDI and AT&T Inc., where Cisco also has contracts.
Miller Tabak, for one, is bullish on the prospects for Sonus. The firm just initiated coverage on Sonus with a ‘buy’ rating and $4 price target; shares of Sonus were trading 2.13 percent higher by about noon Eastern on Friday, at $2.88. Miller Tabak analysts expect 3-5 percent top-line growth this year, 5-10 percent in 2011 and 10-15 percent in 2012, according to TheStreet. They further predict Sonus stock to double over three years, all thanks to installations of the new Sonus session border controller.
