Loss-making Novatel to lay off 80 employees in restructuring

Module maker Novatel Wireless is to embark on a major restructuring program including staff redundancies just weeks after reporting a widening of its losses for the second quarter of the year.

In a statement on its website, the company said it would shut down one of its development sites as well as various manufacturing and other activities.

Module maker Novatel Wireless is to embark on a major restructuring program including staff redundancies just weeks after reporting a widening of its losses for the second quarter of the year.

In a statement on its website, the company said it would shut down one of its development sites as well as various manufacturing and other activities.

Between 75 and 80 employees are expected to lose their jobs as a result of the move.

Novatel (San Diego, CA, USA) said the restructuring would take between 30 and 45 days, starting immediately, and lead to annual, pre-tax savings of between $10 million and $11 million from the fourth quarter of 2013 onwards.

“The initiatives we announced today are intended to maximize efficiencies and optimize business operations,” said Peter Leparulo, Novatel’s chief executive. “We are seeing an increasing overlap in our mobile computing and M2M segments, which allows us to leverage development resources across our business units while still developing the strongest product portfolio for both segments.”

“These initiatives also will help ensure our business model is well positioned for the long term,” Leparulo added. “We believe we are at the center of several new growth markets, and our aim with this plan is to optimize our operations as we sharpen our focus on those key growth areas.”

In August, Novatel said its net loss for the three months ending June had grown to $7.89 million from $4.52 million in 2012, with revenues shrinking by 11.1%, to $91.12 million, over the same period.

Although Leparulo blamed components shortages for the setback, the company’s mobile computing products division is being hurt by competition from low-cost Chinese vendors including Huawei (Shenzhen) and ZTE (Shenzhen).

Novatel expects to record a charge of between $3.2 million and $4.6 million in the second half of 2013 as a result of the restructuring, but is sticking by third-quarter revenue guidance originally provided in August.

The company said the restructuring would streamline its research and development resources and drive efficiencies through the consolidation of several global manufacturing activities.