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July 28, 1997updated 05 Sep 2016 12:42pm

MADGE RESTRUCTURING: 700 JOBS CUT AND ATM EFFORTS SCRAPPED

By CBR Staff Writer

Madge Networks NV followed the announcement of first quarter and first half losses with sweeping plans to restructure. The company will see a third of the workforce cut and significant cuts to its product strategy. In a bid stem the growing losses, Madge says it will focus on its core abilities, a move that results in the loss of around 700 jobs throughout the its worldwide operations. Among those leaving the company is chief operating officer Mark Jones, who was based at the company’s San Jose, California headquarters which is also set to close. The company is to switch its headquarters back to the UK less than five months after it moved it to San Jose, California. Over 50% of its revenues are from within Europe. The cutbacks mean an end to Madge’s ambitious MadgeOne end-to-end networking strategy. MadgeOne was an attempt to leverage its Token Ring and Ethernet local area networking products into an end-to-end line by adding asynchronous transfer mode backplane switches. In development for two years, the 2.6 Gbps Collage 740 Backbone ATM Switch was launched last April, but will not be developed further. Around 150 ATM development staff are set to loss their jobs as a result of the decision. Madge says that although ATM sales were generally growing quarter on quarter they were well below its predictions. Funding the effort was blamed for much of the losses. Our failure is a complex story but we set ourselves very ambitious goals without the resources to compete with the end-to-end player, said Richard Zambuni, vice president of marketing at the company. Last Tuesday, Madge reported net losses of $11.5m during the first half of the year on revenues that dropped 14.5% to $209.5m. Development of ATM uplinks for its local area networking products will move to a new Ethernet unit that the company has formed along with three other units to focus on specific areas: Token Ring, Ethernet, videoconferencing and ISDN. Over 50% of revenues come from Token Ring products, but sales of ISDN and videoconferencing equipment are growing faster. Madge recently expanded an existing OEM agreement to supply its LAN switches and hubs to Lucent Technologies Inc to include the Collage 740 Backbone ATM Switch. It says it will continue shipping the unit and still be able to produce the units required by the deal, despite manufacturing cut-backs. No one familiar with the deal was available to comment at Lucent.

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