Borland restructures, expects layoffs after Nielsen departure
January 15, 2009 —
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As Borland Software moves on after the departure of CEO Tod Nielsen, one analyst questions the health of a company that has seen two top executives leave and low preliminary earnings for the fourth quarter of 2008.
Nielsen resigned from Borland to become COO of VMware, but he will remain on Borland’s board of directors. He had been the company’s president and CEO since November 2005 before announcing he had joined VMware on Jan. 6. That same day, CFO Erik Prusch was appointed acting president and CEO.
Bola Rotibi, a principal analyst with Macehiter Ward-Dutton, said that one has to question how well things are going at Borland with Nielsen leaving the company while their share prices and revenue haven’t been strong.
“I think a lot of people will say, ‘Tod’s moving on,’ and this and that, but we’re not talking about going to be COO of IBM, which would be an offer you can’t refuse,” Rotibi said. “When you think about these things, you sort of have to say to yourself, ‘Things can’t be so fantastic at Borland, because otherwise he wouldn’t have left.’
“I think Borland’s going to have some tricky times; however, they believe they’re well-placed to weather the storm, and they think they’re in a better position to be able to return back to profit. But like anything, the proof is in the pudding. To a certain extent, they’ve talked about returning to profit quite a few times, and it still hasn’t happened.”
Meanwhile, Peter Morowski, senior vice president of research and development, will also be leaving Borland to pursue other opportunities, according to the company.
Borland further announced that it will reduce its workforce by nearly 15%, expecting to lay off approximately 130 employees. Borland executives said the majority of the company’s planned layoffs are part of a plan to restructure the company’s marketing strategy and to create a global sales team. These workforce reductions are expected to be completed by the end of the first quarter 2009, with annualized savings of between US$12 million and $14 million, according to Borland executives. The company also said it expects costs of approximately $2.5 million to $3.5 million associated with the reduction in staff.
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