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By | Chris Mellor 21st July 2015 18:19

Staff at stumbling server storage supplier QLogic brace for big layoffs

Up to a fifth of workers at risk as business faces downturn

QLogic, swaying in the doorway with a tatty photocopy of its lousy prelim results in hand, has warned staff they will be axed to cut costs.

A couple of weeks ago, the server-storage connectivity card vendor signaled poor first fiscal 2016 quarter results were coming: sales will be up to $19m lower than the most optimistic estimate; a 5.4 per cent decline from the year-ago quarter.

Prasad Rampalli, QLogic's CEO, said he was "disappointed with the level of business activity during the quarter," and would "work through these headwinds, leveraging our technologies and solutions to expand our addressable market opportunities.”

That's not a short-term fix and, if the headwinds affecting QLogic continue, costs must be cut to show investors things are being done while the longer-term fixes are being readied.

We have heard that Rampalli is preparing to lay off up to 200 of his 927 or so staff, and that morale is low. Henrik Hansen, QLogic's EMEA marketing head, who said he had just returned from holiday, told us: "I am not aware of any restructuring plans and hence cannot comment."

QLogic's shares have been trading in the $14 to $16 range from March to July. The results warning sent them off a cliff to the $11 to $12 area. If Rampalli can't announce decisive actions on July 30 when the first quarter results of the fiscal year are formally reported, they could nosedive further. Investors wouldn't be pleased with the new CEO; he took up the role when joining Q in February. His honeymoon is well and truly over. ®

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