Emulex to Ax 10% In Restructuring Plan
There’s a lot of end-of-year activity at Emulex as it announces plans to ax 10% of its employees in a workforce reduction and tries to find its way back to financial and shareholder relations health.
Earlier this week, Emulex announced that it was going to implement a restructuring. The Emulex workforce reduction of 10% is part of the plan. It would also include consolidation of certain engineering activities and closure of its Bolton, Massachusetts facility. The Company said it expects to incur up to $10 million of restructuring charges.
The restructuring comes on the heels of a $175 million convertible senior note financing and the sale of about $4.7 million of common stock to (Underdisclosed.com favorite) Starboard Value in mid-November.
On November 11, 2013, Emulex seemed to get its relationship with activist investor (also an Underdisclosed.com favorite) Elliott Associates in order, which reinstated Elliott’s standstill and included agreement on the composition of the board of directors. At the same time, Emulex announced that is Executive Chairman of the Board would be stepping down.
Based on the timing and character of the SEC filing with these announcements, it appears that these were preconditions to selling $180 million of convertibles notes and shares of common stock. In addition, it seems to have transformed Emulex’ relationship with Elliott from activist shareholder to passive shareholder. Elliott now discloses its holdings in, and intent for, Emulex in a Schedule 13G instead of Schedule 13D.
However, Emulex still has to deal with Starboard.
Hopefully, the governance changes and financings will help Emulex right the ship. We’ll wait to see what year-end numbers look like. However, in the last quarter, a $657 thousand profit in 2012 turned into a $3.6 million loss.