MindTree restructures, becomes design services business

MindTree Ltd. said it completed the restructuring of its wireless products business into a design services business, a move first announced Oct. 19. The company said the restructuring cost between $3.6 million and $3.9 million, much cheaper than its original estimates.
MindTree in late 2009 bought Kyocera Corp.’s Indian facilities for $6 million and counted Kyocera among its first customers.
“We had indicated previously that we have had good traction from our global customers for white-labeled smart phones. However, as conversations ensued, we found that contracting with large global service providers required more commitment and risks in areas such as inventory and marketing than we originally anticipated,” the company said in a prepared statement. “This was a key change from the market conditions which existed earlier and the new model required significantly higher capitalization. Considering the interests of all of our current stakeholders, we decided to restructure the wireless business as a design services business.”
Restructuring costs include layoffs, legal fees, asset writeoffs and payments to vendors for cancelling contracts. However, originally the company thought it would costs between $12 million and $14 million to restructure.
MindTree Wireless will now become a services business, and will be merged into MindTree, which the company said may allow it to realize more synergies. “MindTree is continuing its efforts to monetize the LTE IP and phone design. If these efforts prove successful, it will help offset the restructuring costs to the extent of value realized. However, the outcome & timing of such efforts are difficult to predict,” the company stated.