June 29, 2006 West Sussex, UK -- Spirent Communications today announced the restructuring of its communications businesses. Over the next year, the company will manage significant product transitions within its Performance Analysis Broadband Division, as sales of older platforms decrease and are replaced by new products, and within its Service Assurance Division, as legacy product revenues continue to decline and the company increases investment in new monitoring equipment for voice, video, and data networks.
During the transition phase, Spirent will continue to carefully manage the balance between the cost base and maintaining the capability to generate long-term growth, say company representatives.
Accordingly, it is implementing restructuring actions in the Performance Analysis and Service Assurance divisions to realign resources and reduce operating expenses. The major part of these actions will take place in the Service Assurance division, which will enable it to maintain a near break-even result for the second half of 2006 (pro forma break-even sales for Service Assurance are estimated to be £36 million per year).
The total annualized cost reduction will be approximately £9.0 million per year. The cost of these actions is a one-time charge of £5.0 million of which £4.0 million will be in cash, to be expensed and reported in the company's forthcoming interim results on August 10, 2006.
"The main consideration behind these restructuring actions is to ensure that our resources are allocated appropriately to develop our enhanced products," explains Anders Gustafsson, chief executive of Spirent. "This will ensure that we can offer the platforms required by network equipment manufacturers for the development of their own products, and by service providers for the deployment of their next-generation networks."