Business software solutions provider Progress Software Corp. (PRGS: Quote), Wednesday revealed new restructuring plans to divest ten of its non-core product lines and layoff about 10 to 15 percent of its total workforce. The Bedford, Massachusetts-based company deemed the the new steps as necessary to improve profitability and shareholder value.
The company also authorized a $350 million share repurchase program as part of its restructuring.
Progress Software indicated the strategic plan the result of a five-month evaluation of its product portfolio, business model, capital allocation strategy, customer base and future opportunities, led by Chief Executive Jay Bhatt.
In the statement Bhatt said, "Valuable analysis, market feedback and lessons learned from previous product strategies helped inform our view and we fully intend to evolve Progress into a leaner company that will help to lead the computing evolution from on-premise to the Cloud. The Board and I are confident that Progress has the right DNA, scale and experience to make this transformation successful for the benefit of all stakeholders."
The company expects to complete the layoffs by the second and third quarters of 2012.
Progress intends to divest ten products by the middle to end of fiscal year 2013. The products include Actional, Artix, DataXtend and FuseSource among others, which generated total revenues of $172 million last year. Progress said "Each of these product lines are strong and viable, however, they no longer fit into the company's core portfolio."
Progress also authorized a buyback plan of $350 million shares, and expects to complete about $150 million of this buy back by 2012-end and at least $200 million by 2013.
Looking forward, the company expects its core products to achieve a revenue growth rate of 5 percent in fiscal year 2013 and 7 percent in 2014 and beyond.
Last month, Progress Software reported a 64 percent decline in first-quarter profit, as its software license revenues continued to drop while expenses increased. The company's Financial Chief Charles Wagner had also announced his resignation.
PRGS is currently trading at $23.45, up $1.20 or 5.39%, on a volume of 0.4 million shares on the Nasdaq.
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by RTT Staff Writer
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