Last month, I wrote at length about Mitel’s problems and uncertainties over its long-term future. Over the last one year, Mitel’s performance graph has largely been a mixed bag. After an ordinary Q2, the company returned to profitability in the next quarter. Mitel claimed it would disrupt the personal collaboration segment with its new offering – the Mitel UC360 Collaboration Point, an innovative, first-of-its-kind device for the personal office meeting space.
The company was subsequently forced to cut 200 full-time employees, and revise its quarterly earnings guidance more than $10 million lower. Therefore, expectations were low as Mitel set out to announce financial results for the first quarter of fiscal 2013 ended July 31, 2012.
There were no surprises really as Mitel narrowed its fiscal first-quarter net loss amid higher revenue and improved margins, but missed analyst estimates. IMO, the ‘slowing market’ for Mitel’s products is a cause for concern, especially when its main competitor ShoreTel seems to be clinching key deals.
Perhaps, it’s time for serious introspection about what’s wrong with Mitel – whether their products aren’t competitive any longer, the branding strategy needs to be revisited, the dealer network needs a revamp or perhaps all of the above. For a company that’s recognized as one of Ottawa’s oldest and best-known technology companies, Mitel needs to act soon or else it’s looking down the barrel in the coming quarters.
Mitel’s net loss for the first quarter stood at $2.1 million or $0.04 per share, compared to a loss of $2.8 million or $0.05 per share in the prior year. The company’s adjusted income for the quarter was $4.5 million or $0.08 per share, compared to $8.5 million or $0.15 per share in the year ago period. Net revenue down by to $138.5 million, from $149.1 million for the same quarter last year. Mitel says it expects revenues between $ 140 million and $145 million for Q2 2013.
“Mitel’s results for the first quarter reflect a general deterioration in the macro environment, orders that did not ship and implementation delays on customer projects. In response to these results we have taken immediate actions within the business,” said Richard McBee, chief executive officer, Mitel. “Our win rates remain strong, aided by our product leadership in virtualization and cloud offerings which continue to be our differentiated positioning with both channel partners and customers.”
The company’s shares fell 4.14 per cent to $2.78 on Nasdaq on Friday. To put things in perspective, the company’s stock has fallen 12.58 per cent so far this year and a further decline can’t be ruled out.
Mitel’s planned job cuts costing $2 million, would be global and will take place during the current quarter ending Oct. 31, 2012. Mitel also plans to close what officials called “excess facilities”. While those measures are the need of the hour, I seriously believe Mitel also needs to do more with its products to be competitive again.