Fixed wireless vendor Wi-LAN Inc. announced late last week it has axed 60 jobs in addition to the 60 it cut in July, reducing the total workforce to only 55 people.
Hatim Zaghloul, chairman and CEO of the Calgary-based company, will now take on the role of president, a position formerly occupied by Bill Hews, who will stay on its board of directors.
Zaghloul says the continued cuts in personnel are imperative in today’s tight economic climate. Moreover, he wishes he had done it sooner. “It doesn’t take my nuclear physics degree to conclude that it’s the right thing to do,” he says. “Heading to profitability sooner is a good thing for everybody.”
On Monday, the company was in the midst of reducing its office space, cutting its leasing costs by 60 per cent. The savings in space and salaries will go immediately to the bottom line, says Zaghloul. “We basically saw that we do not affect our 2002 sales by doing this. . . . You basically decide, if it doesn’t affect my revenue, let me just do it. It improves my bottom line by double.”
The cuts may cost the company in the 2003-2004 time frame, but Zaghloul says he can make up for that with sales next year.
The economic crunch which has hit the IT industry so hard this year — particularly telephony markets — has an upside, according to Zaghloul. Ultimately it will separate the pretenders from the real value-providers. “(The crisis) will benefit the genuine companies and the genuine leaders in this business,” he says. “Of course, it will kill a lot of the fluff companies — companies that lived on B.S. and announcements and stuff like that will die in this crisis, and thank God for that.”
Yankee Group of Canada telco analyst Iain Grant agrees that Wi-LAN may have had little alternative to its cost-cutting measures, but Graybar Electric Canada Ltd., one of the company’s gold certified reseller partners, has lost confidence in its ability to support its solutions.
“We might drop the line,” says Theo Lammers, a network sales specialist for Graybar. The Mississauga, Ont.-based company also resells solutions from Avaya and 3Com.
“They doubled their sales over the previous year, so I’m not displeased with the performance, but I’m displeased with the support we’re receiving right now.” The cuts in personnel means Wi-LAN will no longer be able to adequately support its partners and customers, says Lammers, who also doubts the company can deliver on its expectations of a strong sales year in 2002. “It doesn’t do good things for the mid-term future, this year and the year after,” he says. “They can’t work the marketplace now to reap the rewards next year, because they have no people.”
Wi-LAN’s other interests, Til-Tek, a division of the company; UC Wireless, a wholly-owned subsidiary; and DTS, a company Wi-LAN owns 51 per cent of, will be unaffected by the layoffs. According to Zaghloul, the company will focus on its enterprise business and shelve any plans to enter the consumer space temporarily.
