GRIC Restructures, Lays Off
June 26, 2002
The hotspot aggregator and ISP is taking actions to achieve profitability, including cutting ten percent of its global workforce.
GRIC Communications of Milpitas, CA, announced Wednesday that the company will be reducing its global work force by 10% (16 people) in an effort to "help achieve profitability this year." Most of the layoffs will occur in the company's marketing, engineering and general & administrative areas.
Charges for restructuring and associated charges will include up to $700,000 related to reducing the company to a core of 136 personnel, up to $400,000 for consolidating or closing offices, and under $100,000 for write-down of fixed assets; total charges could amount to between $900,000 to $1.2 million for the second quarter. Expected operating expenses per quarter as of Q3 should be $5.9 to $6.1 million.
GRIC says that revenue will grow at a rate of between 9 to 11 percent for the second quarter 2002, with an increase of gross margins between 52 to 54 percent.In the first quarter of 2002, the company experienced a $2 million loss (10 cents per share) with revenue of $7.4 million. The company's Series A Preferred Stock was recently issued for $15 million, for which the company recorded a $11.8 million one-time, non-cash dividend. They expect 2002 annual revenue to be between $33 and $36 million.
In the announcement, GRIC CFO Kim Silverman said "Given the current downturn in the telecommunications industry and the state of the global economy generally, our modest revenue growth rates are healthy. Our restructuring measures are designed to help us preserve cash in this environment while managing our cost structure as we focus on selling our leading services and capturing emerging market opportunities. Profitability in 2002 continues to be our focal objective."
GRIC announced a deal with hotspot provider Wayport in April this year, giving GRIC subscribers Internet access via Wayport-enabled hotels and airports in the United States. Through its GRIC Alliance Network, the company comprises over 300 ISPs, telecoms, and wireless-ISPs in over 150 countries.
Eric Griffith is the managing editor of 802.11 Planet.