Covad to cut work force by 8 percent
As its incumbent rivals get bigger, Internet service provider Covad Communications Group Inc. is getting smaller with layoffs of about 8 percent of its employees this quarter.
The cuts at Covad, which had 925 employees at the end of March, are intended to make growth businesses such as small-business DSL (Digital Subscriber Line) and wireless broadband more efficient, said company spokesman Michael Doherty.
Half of the layoffs are involuntary and half took place through attrition, he said. They will be completed by the end of the second quarter on June 30, at which point the company will have about 850 employees. The cuts, announced Thursday, are across several departments and most are taking place at Covad's San Jose, California, headquarters, he said.
Covad's legacy business of selling wholesale broadband to EarthLink Inc. and other competitive ISPs, primarily for consumers, has suffered under price competition from incumbent carriers. Those established players, namely AT&T Inc. and Verizon Communications Inc., have grown through industry consolidation over the past few years. However, Covad's own retail offerings for small businesses are growing rapidly, according to Doherty. Last month, the company upgraded its network in 11 markets to offer fat DSL pipes at 8M bps (bits per second) to 15M bps downstream and 1M bps upstream.
The company will take a restructuring charge of about US$1.5 million in the quarter but expects to save approximately $4 million in the second half of the year as a result of the cutbacks. In the first quarter ended March 31, Covad lost about $14.5 million or $0.05 per share while its revenue increased about 2 percent to about $120 million. The company's stock, which has fallen more than 40 percent over the past year, was down $0.05 at $0.86 in Thursday afternoon trading on the American Stock Exchange.
IDG News Service
Sign up for ITworld's Daily newsletter
Follow ITworld on Twitter @IT_world
Esther Schindler
If the comments are ugly, the code is ugly
claird
SVG a graphics format for 21st century
pasmith
Take Chrome OS for a test spin
Sandra Henry-Stocker
Solaris Tip: Have Your Files Changed Since Installation?
jfruh
Android fragments vs. the iPhone monolith
mikelgan
What Gizmodo missed about the Pro WX Wireless USB disk drive
Sidekick: The Good News & the Bad News
Either way you look at it Microsoft Data Center management did not follow standards or best practices in this failure. In which case it makes me wonder more about the outsourcing of corporate data much less personal data.
- mburton325
Join the conversation here
Quick, practical advice for IT pros. Made fresh daily.
Want to cash in on your IT savvy? Send your tip to tips@itworld.com. If we post it, we'll send you a $25 Amazon e-gift card.
