Handset distributor Brightpoint Inc. said it would slash $40 million to $45 million in annual spending and reduce daily debt by more than $100 million this year.
“The company believes that there continues to be uncertainty about the impact of the global economic downturn will have on the wireless device industry during 2009,” the company said in a statement yesterday.
The company will achieve savings by eliminating top executives’ cash bonuses, reducing staff bonuses, freezing employees’ base pay and freeze hiring.
About two-thirds of the projected savings will come from a 7% cut in existing jobs, which will affect about 220 workers, according to the company.
The company also posted its fourth-quarter earnings yesterday and said that revenue reached $1 billion, down 36% year-on-year, and posted a loss from continuing operations of $344.4 million, down from a positive earning of $14 million in the year-ago quarter, due to a variety of charges relating to its acquisition of Dangaard Telecom in 2007. Adjusted income from continuing operations was $7.7 million, down from $25.7 million in the year-ago quarter.
“The earnings performance is encouraging and shows management is indeed delivering on the items in their control and adjusting on the fly to a smaller market,” wrote analyst Ittai Kidron at Oppenheimer in a note to investors. “Clearly, 2009 will be challenging, but we believe Brightpoint will exit with a leaner operation that grows market share.”
The company cited the number of handsets it “handled” to illustrate the nature of the changing market in the current downturn.
Brightpoint handled 22 million handsets in the fourth quarter, compared to 27 million in the year-ago quarter (down 18%) and 20.3 million (up 8% sequentially) in the third quarter.
Brightpoint to cut spending, jobs: Handsets handled dropped 18% year over year
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