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15% of workers face axe, US workers face pay cut

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RSA Security, best known best known for its SecurID key-token authentication products, has announced plans to lay off up to 215 people after it reported losses on declining sales.

Revenue for RSA's third quarter was $62.6 million, compared to $72.0 million for the same quarter last year. The firm made a net loss of $15.5 million compared to net income of $40.0 million for the third quarter of 2000. Operating losses this time around came in at $5.4 million.

After the disappointing results, RSA has announced a radical restructuring and cost saving program to cope with declining sales. Up to 15 per cent of RSA's 1,430 workers (or 215 people) face a pink slip and remaining US workers will have their pay cut by 10 per cent. The firm has also taken an axe to its discretionary spending program.

RSA also announced an immediate moratorium on any further investments in the RSA Ventures fund, and plans to wind down its RSA Capital segment which will see its New and Emerging Security Technologies group brought back into its core business.

The firm expects to take a charge of approximately $10 to $11 million in its fourth quarter to cover employee severance and other costs in connection with its restructuring.

"The weakening global economy and the aftermath of September 11th had a dramatic impact on our results," said Art Coviello, chief executive and president of RSA Security. "Whether the current economic conditions persist for an additional quarter or more, we believe we are taking the steps necessary to navigate through these difficult times and position our company to grow when the economy begins to rebound."

RSA expects to make revenues of between $63 to $65 million in its fourth quarter which it expects will result in a loss of between $(0.15) to $(0.17) per share. This translates to a net loss of between $8.3 million to $9.4 million, based on the same number of shares in circulation then.

However it expects to return to profit next year with revenues of between $285 to $295 million in 2002. Net income per share will come in at between $0.09 to $0.19 per share in 2002, RSA estimates. ®

External Links

RSA's Q3 results

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