Mitel Earnings Disappoint; CEO Smith Resigns

Mitel Networks Corp., a Canada-based IP hardware and software maker, is losing its CEO, the company said on Thursday.

The news came as Mitel posted weaker-than-expected first fiscal-quarter results, and as the company has lost more than half its value since going public in April at $14 per share.

Still, the unified-communications specialist showed more income and revenue in the three months ended July 31 than it did in the same quarter in 2009. Sales rose from $159.4 million to $160 million and income jumped to $6.8 million, from $2 million. Profit fell from the quarter ended April 30, however that was when Mitel showed $22 million in income. In the latest quarter, the company also shored up its cash and cash equivalents by 10.6 percent, reaching $84.7 million.

The numbers left executives and analysts somewhat disappointed. Performance came in below forecasts as small and medium enterprise clients spent less than hoped on gear and platforms, hampered by the global recession and limited access to credit. Mitel on Aug. 9 revealed its sales would not reach the $163 million to $167 million range it originally predicted.

Indeed, the first quarter turned out more challenging” than thought, CFO Steve Spooner said on a conference call with analysts. The upcoming quarter doesnt look much more promising, either. Mitel said revenue should fall between $160 million and $163 million for the three months ending Oct. 31.

Meanwhile, Smiths impending departure came as a slight shock, just a few weeks after Mitels U.S. president, Richard Dell, left the company with no explanation. One possible reason for Dells exit slipped on Thursday when Smith said the Mitel board wants its U.S. business model to be driven more aggressively,” and that includes more intense work with channel partners. (Mitel, in a statement to PHONE+ and VON/xchange in August, declined to explain why Dell lost his job.) Smith himself joined Mitel in April 2001 as CEO and a board member; he had worked for Mitel years earlier. As CEO, Smith oversaw the Inter-Tel acquisition and Mitels initial public offering, which took place earlier this year and raised less money than projected. Smith will remain as a director after he retires, but that date has not been set because Mitel has yet to find a successor.