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The Dublin-based software firm, which employs 258 globally, will cut 45 jobs, with 12 redundancies out of its 123-strong Irish workforce, ElectricNews.Net has learned. A spokesperson for the company said the cuts were necessary in light of the poor market conditions the firm is facing. "Spectel's main objective is to remain profitable," said the spokesperson. "The slowdown in the market, particularly in the US, is greater than the company anticipated."
"Despite the fact that the market for our products continues to expand, it has done so less rapidly than anticipated," said Gerard Moore, chief executive officer of Spectel, in a statement. "Whilst it is regrettable that redundancy is necessary (and we have kept this to an absolute minimum), we must ensure that Spectel remains a strong and viable entity and importantly be in a position to invest in the future."
In fact, Spectel brought 50 new employees on board at the start of the year, expecting the video conferencing segment to take off in 2002. And although the business matched last year's revenue figures for the first half of this year, the firm has been unable to meet the higher targets it set for the first half of 2002, the spokesperson said. The company is now confident that it can comfortably meet its revised sales targets, he added.
The job losses, some of which have already been implemented, follow Spectel's decision in May to cancel its initial public offering. At the time, the firm's IPO was expected to raise as much as EUR46 million, but in similar remarks to Thursday's comments, the company said in May that the weak sector would produce a poor share sale.
"Whilst we are disappointed not to be able to complete the transaction, the board decided that price levels achievable in this market did not fairly reflect the value of this strongly growing business," claimed Moore at the time. The company now says it will look at other methods to facilitate growth, including raising capital through equity investments.
Two of Spectel's competitors, Raindance and Webex, have experienced similar woes with regard to share prices, even though their revenues and earnings have increased substantially over the past year. Raindance shares were trading at around USD6 at the start of the year, but by mid-May they had sunk to just over USD3. When the company released its Q2 results in late July, the firm's shares rebounded, but by Wednesday of this week Raindance shares closed at only USD2.49. Although Raindance's second-quarter earnings per share met with Wall Street expectations, the company's revenue, at USD15.4 million and 69 percent higher than last year, was slightly behind forecasts.
Webex also saw revenues almost double in its second quarter to USD33.2 million as it topped Wall Street's EPS estimates of USD0.04 a share by two cents. But such positive news has done little to lift its stock price, which has fallen from an early January high of over USD28 to Wednesday's close of only USD12.50.
Nevertheless, the market for the conferencing services of Webex, Raindance and Spectel is predicted to grow significantly in the years ahead, with research houses such as Wainhouse Research predicting that the conferencing infrastructure market will grow from USD375 million in 2000 to USD1.25 billion by 2005, representing a compound annual growth rate of over 27 percent.
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