Companies like to try and bury bad news by disclosing it on a Friday, so it’s no surprise that Overland Storage issued a press release about layoffs on the day before the three-day Labor Day weekend.There is really little surprise around Overland’s 53 layoffs, which come to 13 percent of its employees. It’s the next step in the company’s transition from a tape to disk vendor as it fights for survival. Overland acquired the Snap Server NAS product line from Adaptec for $3.6 million in June, but lost $8.6 million last quarter, and had $9.7 million in cash at the end of the quarter. The restructuring is expected to save around $10 million a year.
Overland CEO Vern LoForti said on the last earnings conference call that the company is close to completing financing to support the Snap business. A company spokeswoman says that financing is still in place, which means Friday’s layoff did not come about because financing fell through. But even that financing would not be enough without layoffs.
“… our recent acquisition of the Snap Server business facilitates our entry into the distributed NAS market, and initial customer response has been very positive,” LoForti said in a statement about the layoffs. “The Snap acquisition did, however, result in a substantial increase to our operating expense base. Having recognized the need to rationalize the newly combined business, we have examined all areas of the company in order to streamline and focus on the geographic regions and product initiatives that offer the most immediate return on investment.”
So basically, it comes down to replacing 53 jobs on the tape end of the business with about the same amount acquired with Snap.