Extreme Networks signals data centre channel changes coming

Extreme Networks has signaled that it plans on making some channel changes as it looks to improve the performance of its data centre business.

The firm released its fourth quarter numbers with an insight into how the business, which had been swelled by acquisitions of Avaya's networking unit and Brocade's datacentre operation, has fared over the three months to 30 June.

The headline numbers included a 56% increase in revenues to $278.3m and a GAAP net loss of $5.6m, which was a decrease of $18.8m.

Ed Meyercord, president and CEO of Extreme Networks, said that its fiscal 2019 would include $98m of cross-selling opportunities after closing $40m in FY18.

But there was a note of caution, and indications that there would be some changes to the distribution strategy in the fiscal year to come.

"We are resetting expectations for our data center business, and are taking swift action to rebuild our sales pipeline after a disappointing fiscal fourth quarter, while celebrating some key wins," said Meyercord.

"Last quarter, we completed a digital transformation initiative within our supply chain and vendor managed inventory systems, allowing us to run a much more responsive operation. We are now undertaking an initiative over the next six months to bring our portfolio together and consolidate distribution to improve channel efficiency," he added.

Those changes are going to impact revenues for the first half of fiscal 2019 by $30-40m.

Meyercord said that it had a strong track record of turning its acquisitions into growth centres and had done it with Enterasys, the Zebra WLAN business and the Avaya networking operation.

"And now, we are focused on driving growth and higher margins in the data center business we acquired from Brocade. We are investing in our datacenter solutions portfolio and are confident we will be able to grow this business at higher margins," he said.