Mitel Undergoes Restructuring on IPO Anniversary

by Matt Klassen on May 10, 2011

Mitel Stock Chart from May 2010 to May 2011

In a year defined by slumping stocks and growing analyst concern, I’m sure this wasn’t the first anniversary that Mitel executives imagined back in 2006 when they first stated their intention to go public with the communications company. The unfortunate reality for Mitel continues to be, however, that these initial struggles are leaving a distinctly negative first impression with many potential investors, investors who may not know Mitel’s long and successful history in the telecommunications market.

For investors looking at the Mitel stock for the first time, seeing its value dip from an inauspicious opening day $14 to its current stop at just over $5, the assumption seems to be that the Canadian telecommunications company is an unmitigated disaster, and unfortunately Mitel is has not done much quell such notions, that is until now.

It was back in March, following the company’s Q3 fiscal report, when company CEO Richard McBee attributed Mitel’s surprising $4 million Q3 loss to ongoing restructuring within the company, restructuring that saw former CEO Don Smith step down and McBee take the helm. It was in that same conference call that McBee suggested that his company may undergo “additional restructuring to reduce expenses in the future,” and it now looks like the future has arrived, now the only question left is, has it arrived too late?

After months of getting a feel for the needs of his customers and the market itself, McBee announced that he would be, “implementing a strategy anchored by three initiatives in a multi-step approach to grow Mitel’s business as a unified communications and collaboration provider.”

These initiatives include organizing the company’s six types of solutions into three primary divisions, with the main focus being the communications solutions business unit that will include both the Mitel’s unified communications and collaboration products and services. The other two divisions will be NetSolutions, responsible for mobile services, broadband and network services, and DataNet, the unit responsible for distribution of third-party products to the company’s partners and customers.

Additionally, the company recently saw the departure of president and COO Paul Butcher, a move that has subsequently seen McBee assume presidential duties and abolish the COO position altogether. The restructuring will also see Mitel streamline its geographic sales operations into two distinct units, the Americas and International, stating that it will be directing its sales force to focus on a, “select group of customers” within those markets.

So what does this all mean? For starters it means more uncertainty for Mitel, at least in the short term. Investors will almost certainly be scared by this restructuring, as whispers of desperation and struggle float are almost certainly floating through the market.

That being said, if Mitel hopes to ever right the ship, this is certainly the way to go. Mitel needs to trim the fat and refocus its operations if it ever hopes to make a name for itself in the public market, it just remains to be seen whether investors will be patient enough to give Mitel a chance.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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CEO McBee Takes Slow and Steady Approach to Solving Mitel’s Problems —
August 16, 2012 at 6:19 am

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