Chyron Lays Off 20 Employees, Says it will Save $3 Million per Year

Posted by Joe Zaller
May 08 2013

Broadcast Graphics specialist Chyron Corporation said it has cut the size of its workforce by 20 employees as part of a reorganization plan designed to “reduce operating expenses while maintaining its focus on strategic initiatives.”

The company estimates that it will save approximately $3m on an annualized basis as the result of the layoffs, beginning in the third quarter of 2013.

All terminated employees will receive severance pay and benefits, as well as an adjustment in the terms of their stock option and/or restricted stock unit (“RSU”) equity awards outstanding on their termination date. The affected employees’ RSU awards will be modified to state that they will vest on June 24, 2013 if the impacted employee signs a separation agreement from the company.

The company says that expenses for severance, benefits and changes in equity awards will be approximately $950,000, with severance benefits accounting for about $600,000, and costs relating to the changes in the equity awards making up the remainder.

These charges will be recorded as an expense in Q2 2013.

These new staff cuts continues the trend that stated in Q3 2013, when Chyron appeared to shift from its previous strategy of increasing engineering, sales, and marketing expenses in anticipation of increased revenue from both new products and cyclical spending from broadcasters gearing up for the 2012 Olympics and presidential elections.

In anticipation  of a strong 2012 Chyron increased its spending across the board, and by the first quarter of 2012 the company’s operating expenses had jumped 20% versus the previous year, including 31% y/y increase in sales and marketing costs, and a 19% y/y increase in R&D spending.

However, when the anticipated new revenues had not materialized by the third quarter of 2012, Chyron CEO Michael Wellesley-Wesley told investors on the company’s Q3 2012 earnings call: “I can assure you that we’ve taken and will continue to take the appropriate steps to align our operating expenses with the current business climate.”  At that time, Wellesley-Wesley said the company had scaled back investments in product development and that the company would also be reducing headcount.  On the company’s Q3 2012 earnings call Wellesley-Wesley told analysts “about 60% of our costs are related directly to people and so it’s difficult to make meaningful reductions in expense — operating expenses — without addressing that fact. The steps we’ve taken will certainly reduce OpEx by 5% or more going forward and you will begin to see the real impact of that take effect in Q1 next year.”

With the announcement of the latest round of layoffs, Chyron is now saying that the impact of these additional cuts will begin to materialize in Q3 2013.

For the full year 2012, Chyron had revenue of $30.2m, down 4% versus 2011, and recorded a net loss of $22.3m, or $1.31 per share. $19.5m of the company’s net loss was valuation allowance against the company’s deferred tax assets.

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Related Content:

Chyron 8K Filing: Discloses Staff Reduction

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Chyron Posts Another Loss in Q4 2012 as Revenue Continues to Decline

Chyron Cuts Expenses as Revenue Declines 3 Percent in Q3 2012

Chyron Q3 2012 Earnings Call Transcript

 

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