Mitel (TSX:MNW)(NASDAQ:MITL) will lay off more than 300 employees this year in an effort to cut down on workforce redundancies, the firm announced as part of its first-quarter earnings report this week.
The Kanata-based telecommunications firm says it will cut roughly 10 per cent of its workforce worldwide by the end of the year. Those cuts will be felt more or less evenly, CEO Rich McBee tells OBJ, including an anticipated 60 job losses from its operations in the National Capital Region. About 600 people work in firm’s Kanata location, with a total of 3,200 globally, he says.
The layoffs are meant to eliminate redundancies at Mitel in the wake of its mobile business sell-off. The firm is merging the operations of its cloud-selling and enterprise-service divisions, previously kept separate. Mitel’s cloud division was kept separate from traditional operations while the firm incubated the business, Mr. McBee says, but that channel has matured to a point where it no longer makes sense to keep it distinct.
The merger means that many roles in the firm – management, human resources, finance, general and administrative roles and a few lab positions – will be duplicated.
“If you’ve got duplication of every level of management, you don’t need that duplication anymore,” Mr. McBee says, quick to dismiss notions that the coming cuts are because Mitel is in trouble.
On the contrary, he believes Mitel has never been better, and says the workforce reductions are a way to optimize the business going forward.
“This is being disciplined operators of a business.”
Mitel indicated in its Q1 results that it anticipates savings of $30 million annually as a result of the layoffs.
The company reported revenues of $223.1 million for the quarter ending March 31, 2017, a decrease of about $10 million from a year earlier. Mitel posted a net loss of $19.7 million for the quarter as compared with a loss of $11.8 million a year ago.
Adjusted EBITDA was in the black for the firm, coming in at $21.9 million. However, this was still a reduction from $22.7 million in 2016.
Markets reacted poorly to Mitel’s results and layoffs announcement on Thursday, with shares dropping seven per cent on the TSX.
Mitel’s future in the capital:
Mr. McBee was optimistic about Mitel’s future in Kanata when speaking to OBJ.
In spite of the coming job reductions in the capital, he believes the engineering work done in this location to be vital, and increasingly attractive to markets and government. The federal government’s announcements about funding “superclusters” and the Ontario government’s $63-million investment in CENGN are reaffirming to Mitel’s presence.
“Government is investing in Ottawa. And we’re going to take advantage of that,” he says.
“If anything, a lot of things will be moving into Ottawa. Ottawa is a technology haven.”