S.D. wireless company plans restructuring
By Kathryn Balint
UNION-TRIBUNE STAFF WRITER
January 4, 2007
Wireless Facilities, a San Diego builder of wireless networks, revealed an “aggressive restructuring plan” yesterday that includes selling money-losing international operations and consolidating facilities to cut costs and improve profitability.
In a conference call, Eric DeMarco, Wireless Facilities' president and chief executive, announced to investors a number of cost-cutting moves:
Selling its business operations in Europe, the Middle East and Africa. The company has signed a letter of intent with an unnamed buyer and expects to realize $5 million in cash by the end of March.
Selling remaining operations in South America to an undisclosed buyer, after having already sold some of those operations.
Discontinuing stock options as compensation to employees.
Accelerating the vesting of employee stock options that are “under water” and taking a one-time charge of $7.5 million in the fourth quarter of 2006.
Consolidating its facilities in San Diego and elsewhere and subleasing excess space in an effort to reduce annual operating expenses by $400,000.
Reorganizing sales, general and administrative positions companywide.
Additionally, WFI announced that it has received the final payments, totaling $9.5 million, from the sale of its Mexican business operations. DeMarco said the intent of the cost-cutting measures is to rid the company of underperforming operations, reduce the company's risk, increase cash flow and improve profitability.
He said the company plans to concentrate this year on securing contracts from companies that acquired advanced wireless spectrum in last year's federal auction, integrating the recently acquired Madison Research Corp. into the company and positioning its federal contracting business for internal growth.
“Every action that we are taking is driven by our commitment to successfully execute in each one of these strategic focus areas and by our desire to minimize or eliminate risks in the areas of our business that can detract us from achieving these objectives,” DeMarco said.
He said the international operations that Wireless Facilities is selling lost $3 million last year.
For the fourth-quarter 2006 earnings, which the company expects to release in early March, DeMarco said Wireless Facilities expects to post lower profit than in the same period of 2005, when it recorded an $8.4 million loss.
In its third quarter, the company posted a third-quarter net loss of $900,000, or 1 cent per share, largely as a result of accounting for stock-option expenses. Without the stock-option charges, the company said, earnings from continuing operations would have been about break-even for the quarter ended Sept. 30.
Third-quarter revenue was $84.3 million, down 11 percent from the same period the year before. |
