Extreme Networks last week bid adieu to its CEO and 9% of its workforce -- or about 70 people -- before announcing today that its first quarter fell far short of expectations. It begs the question of whether Extreme, with a flat 1.5% revenue share of the $19 billion Ethernet switching market for the past two years, can continue to survive at this pace.
"This is a company that's truly having a hard time finding its way," says Yankee Group analyst Zeus Kerravala in this story by colleague Tim Greene. "When you look at all the network vendors out there, what problem is it that Extreme is trying to solve that isn't being solved by somebody else? I think they'll go the route of Enterasys. They'll get smaller and smaller and continue to exist off their installed base until their assets get acquired by somebody else."
For its first quarter, Extreme recorded net revenue of $66.3 million, compared to $89.5 million in the fiscal first quarter of 2009. The company's non-GAAP -- excluding expenses, charges and other items -- net loss was $4.9 million, compared to non-GAAP net income of $2.0 million in the year-ago quarter.
Revenue dipped markedly in all geographic regions. For North America it was down 25%. In EMEA, it was off 33% and in APAC is was down 7%.
Acting CEO and CFO Bob Corey said last week's restructuring was necessary to lower Extreme's quarterly breakeven to less than $70 million in revenue and reduce quarterly operating expenses by approximately $2.5 million.
"As previously announced, our supply chain was constrained during Q1 impacting our ability to deliver product," Corey said in a statement on Extreme's Q1 results. "We are disappointed with our performance in Q1 and are actively improving availability from our Supply Chain to meet Customer demand for our products in Q2. We remain committed to our products, markets, channels and customers."
How long will customers remain committed to Extreme?
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Title of this article...
Are they really a Cisco rival?? I mean seriously...
Agreed, Not a Rival
I have been to only one customer or employer that had them so far. I was there cleaning up some issues and they were using RIP too (Last year okay.) Now Rip is simple, but there was no real reason to use it, except that maybe they wanted something easier than ospf and EIGRP was not available.
Thanks,
Network Support
Definitely Not a Rival
Consider this: Cisco has many individual states in the US where they do more business than Extreme does on a Worldwide basis.
Poor Products, Poor Software
As a major university in atlanta, we've had issues with extreme for over 3 years....can't wait till they die so upper management will have to choose better platform.
When you implement Cisco, you will be very happy!
Thanks,
Network Support
cfo
Never a good sign when the CFO is moved into CEO position, it says a lot about the direction the board thinks it should go and its not sales, marketing, r+d.
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