It said most of the reductions will relate to the enterprise applications business, and it expects to record a charge of $2.1m for severance costs and other restructuring expenses.
After warning is June that third-quarter revenue would be half that expected, it now says that fourth-quarter revenue, which it originally expected to be in the range of $12.5m to $14.5m, is now expected to be in the range of $8m to $9m.
Woody Hobbs, appointed CEO earlier this month, said the company had decided to eliminate the use of fully paid-up licenses and the associated price discounting, and said this hit revenue. While historical sales and pricing policies had built a strong market share position, he said this may have undermined the perceived value of its contribution to the products in which it was installed.
The Milpitas, California-based company expects that fully paid-up license revenues in the quarter will represent approximately 13% of total revenues, down from the 20% previously projected.
Hobbs said that as it had introduced new applications products, it found their deployment required a more complex IT infrastructure than had previously been recognized. This caused delays and losses of some previously anticipated sales.
Phoenix said it was also hit a greater than anticipated build-up in supply chain inventories resulting from Microsoft’s delay in launching its new Vista operating system.
With the restructuring and other reductions in operating expenses, the company said operating expenses in the first quarter of the next financial year will be $15.5m, 24% below the third-quarter figure.
