VA Linux also reported a second quarter net loss, on a pro forma basis, excluding non-cash and non-recurring charges, of ($0.28) per share, compared to a loss of ($0.20) per share in the second quarter of fiscal 2000. This net loss per share is within the range indicated in the Company’s press release dated January 16, 2001. VA Linux also reported that it established additional reserves for excess inventory and potentially uncollectible accounts receivable of $14 million and $2.5 million, respectively.
As we indicated on January 16, we have been affected by the overall economic slowdown which has impacted demand for our products and services, said Larry M. Augustin, CEO of VA Linux Systems. We have recognized the need to adapt to this new economic environment. We have established reserves to address financial exposures and we are restructuring the Company to better compete. We intend to reduce our workforce by 25% from the 556 people we employed at the end of calendar 2000 and will take a restructuring charge in the fiscal third quarter as a result. The amount of that charge will be determined later this quarter. The effect of the restructuring will be to position the Company to achieve profitability at lower revenue levels.
We believe that the overall slowdown in IT spending will ultimately create more demand for Open Source technologies among enterprise customers as they tighten their IT budgets. Our leadership in Linux and Open Source positions us to benefit from the adoption of those technologies by large corporations.
SOURCE: COMPANY PRESS RELEASE
