Extreme Networks hopes you switch to its products. The company designs and markets Ethernet switches to address the networking needs of enterprises, cloud data centers, mobile operators, and service providers. Its switches are marketing primarily under the BlackDiamond and Summit brands. The company, which outsources the manufacturing of its products to Alpha Networks and other companies, also offers RidgeLine software for central configuration, among other functions, and the ExtremeXOS operating system. It serves some 6,000 customers - including businesses, schools, and hospitals -- across 50 countries.
Sales to customers outside the US represent more than 65% of Extreme Networks' total revenue. The EMEA and Asia-Pacific regions account for nearly 40% and more than 15%, respectively, although both saw year-over-year declines in fiscal 2012.
Sales and Marketing
Extreme Networks operates in a crowded networking sector where it faces competition from incumbent Internet protocol (IP) and Ethernet specialists, including Cisco and 3Com (now part of HP), telecom equipment giants such as Ericsson, and relative networking newcomers, such as Chinese up-and-comer Huawei Technologies. Extreme sells through distributors, resellers, and OEMs; its largest customers include Westcon Group (19% of sales), ScanSource (13%), and Ericsson (12%).
Revenue was down 4% in fiscal 2012 (ended June 30) to $323 million. The networking equipment sector sees average selling prices for its products fall on a regular basis due to competitive pricing pressures, promotional pricing, and technological progress. Sales were also impacted by a shift in product mix as part of a restructuring, the slow economic recovery in Europe, and weak sales in Asian countries such as India, Korea, and Japan.
Extreme Networks saw a large jump in net income, however, to $16 million (from $3 million the prior year) as most of its expenses (sales and marketing, R&D, restructuring) decreased, in part from a reduction in headcount.
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The company embarked on a restructuring initiative in fiscal 2011 in an effort to focus on specific market verticals (mobile, cloud, security) and improve operational efficiencies. It has reduced its headcount by about 15%, consolidated facilities, and liquidated its Japanese subsidiary.
Another key to Extreme's strategy is expanding its product portfolio; in fiscal 2012 it released the BlackDiamond BD-X core switch for cloud data centers and the Summit X670 for data center top-of-rack deployments, as well as a revised version of its RidgeLine software.