Magic Software Enterprises has conceded that the ‘global restructuring’ it announced recently is likely to see a headcount reduction of 60 positions, or around 10% of its total staff.
The company’s VP marketing and corporate strategy, Avigdor Luttinger, told Computer Business Review that, The basic idea is to lighten the overhead and streamline operations, so I would expect a heavier toll at HQ units.
The application development and integration software vendor said last week that the goal of the restructuring is to, increase operating efficiency, focus the company on the marketing and sales of its flagship products, and increase the company’s profitability.
The reason it has come to this is that its sales have been disappointing and as a result it has dipped into the red. Its second quarter ended June 30 saw sales down 3% to $15.2m, while it reported a net loss of $1.3m. License sales for that quarter decreased 11% compared to the second quarter of 2005.
Magic will announce its fourth quarter and year end results in February, and has already warned investors that the cost of restructuring will have a a major influence on its fiscal fourth quarter results.
The company said there is light at the end of the tunnel though – it claimed a recent new version of its eDeveloper rapid application development product has, been received thus far with enthusiasm by both customers and analysts. It also claimed that its iBolt integration product is on the rise while it also said it continues to recruit iBolt channel partners.
Magic currently has around 600 employees. It is a subsidiary of IT software and services company Formula Systems Ltd but has its own listing on Nasdaq. Its stock has actually risen very slightly since the news of the restructuring broke.