Upside/Reuters: VA Linux cuts staff; loss bigger than expected

“VA Linux Systems (LNUX) today posted a quarterly loss that
exceeded Wall Street’s lowered forecasts, leading it to slash 25
percent of its workforce in a bid to turn a profit amid the U.S.
economic slowdown.”

“The loss was wider than Wall Street expectations of 26 cents a
share as calculated by research firm First Call/Thomson Financial,
and was on the lower end of guidance given by the company last
month, when it said the slowing U.S. economy meant the loss would
be between 24 and 28 cents a share. Revenues for its fiscal second
quarter more than doubled, to $42.5 million from $20.2 million a
year earlier, again at the low end of forecasts of $43 million to
$50 million.”

“To try to achieve profitability at lower revenue levels,
the company said it would cut 25 percent of its 556 workers.

It would also take an unspecified restructuring charge in the third
quarter, Augustin said. VA Linux said it had set up additional
reserves of $14 million to cover excess inventory and $2.5 million
in reserves for potentially uncollectable accounts receivable.”


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