Wireless backhaul provider DragonWave said it plans to cut one-third of its senior management positions in a cost-cutting move and has altered its current working framework with Nokia Siemens Networks.
The job cuts are part of DragonWave is calling “ongoing cost reductions,” and that it plans to provide an update on the benefit of those cuts during its next conference call.
As for the new arrangement with NSN, which will replace its previous agreement, DragonWave said it will receive a $13.9 million cash payment that will “clear the contingent receivable on DragonWave’s balance sheet.” In addition, NSN “will take on additional commitments and costs” so that DragonWave can continue developing microwave products.
The new agreement replaces the previous “Italian services agreement” that began in mid-2012, which called for NSN to provide research and development and other services to DragonWave. The end of that agreement calls for DragonWave to pay a termination fee of $9.1 million over the balance of its 2014 fiscal year, with DragonWave adding that operating costs will be reduced by approximately $3.9 million per quarter.
“The renewed framework will strengthen the alliance between both companies,” DragonWave noted in a statement. “This reinforces Nokia Siemens Networks’ strong commitment to its mobile broadband customers, who will continue to enjoy a complete mobile broadband solution including FlexiPacket Microwave Radios supplied by DragonWave. With this, mobile operators will be able to further drive innovation in the high capacity E-Band and small cell domains.”
DragonWave said that it will continue to be the “preferred, strategic supplier” of packet microwave products to NSN and that the companies will continue to work together on the development of new technologies. DragonWave also noted that it has rebranded the products it acquires from NSN under the “Harmony” brand, with plans to continue supporting those products.
“The strategic agreement envisions Nokia Siemens Networks continuing to maintain the commercial interface to mobile customers and ‘Harmony’ remains a fundamental part of its mobile broadband proposition,” DragonWave added.
DragonWave last year acquired NSN’s microwave transport business and associated operational support system operations for $13.9 million in cash and nearly 2.1 million shares in DragonWave.
DragonWave’s stock (DRWI) closed up more than 28% on Wednesday at $1.99 per share.
Bored? Why not follow me on Twitter?
