I just got word that a number of US offices have been closed by Mitel. A source tells me 60 people were let go, 40 technicians and engineers and there are now only 16 branches in the US. I reached out to Mitel PR who wouldn’t comment due to the quiet period so I did some digging and found a Mitel employee in a supervisory capacity who confirmed US offices were being closed but wouldn’t specify how many.
Mitel has had challenges for a number of years and I won’t go into what they are in this piece. If you are curious see my past pieces in order or pertinence, ShoreTel Filling the Nortel Void?, Mitel to Come Out Swinging, Will They Connect? and Mitel Business Partner Conference 2011 Live Blog.
What is worth mentioning is the new CEO Rich McBee has outlined a plan and part of it consists of aligning its channels. It seems that’s what they are doing. Perhaps what is causing such a stir in the market is the word align sounds a whole lot better than layoffs and office closings.
This by the way is more or less what the company told me a few months back when I reported on layoffs.
I like McBee, he seems like he has a good handle on things and is competent. So I am more inclined to believe the company but at some point the statute of limitations will run out on saying workforce reductions are part of a realignment. Its generally best to do these sorts of things once and get them over with.
By now, it is virtually (pun not intended ) acknowledged by everyone that the company has a big lead in communications virtualization and we know this is a in a major trend in tech and will likely continue to sweep market after market including telecom. So this is the good news regarding the company’s future.
The challenge Mitel has is one of perception. It is never good to have less local sales offices in the eyes of customers. Sure, you can leverage amazing channel partners who can pick up the slack – its just a perception issue.
The company will have a conference call in early December and will likely explain more.
One parting thought is if this company has such a big lead in virtualization and we know this lead should translate into sales over time, why is the company trading with a market cap of $130M? It is either incredibly undervalued, has lost investor confidence or there are bigger problems which aren’t being reported.
I suppose the next few earnings calls will shed light on the details.
Update 11/3/11 5:39 pm: An anonymous e-mailer tells me 176 people were laid off on Oct 31.