ModusLink Global Solutions, Inc. (NASDAQ:MLNK) To Cut 17% Of Workforce


ModusLink Global Solutions, Inc. (NASDAQ:MLNK) recently outlined the path that it hopes to take to improve its profitability in the coming years. As such, the company said it will let go of some of its employees and has already severed links with certain executives in its management team. The idea is to drop down certain operating burdens so that the company can save more money and increase the value for shareholders.

Management shakeup at ModusLink Global Solutions, Inc. (NASDAQ:MLNK)

Among the corporate realignments that ModusLink Global Solutions, Inc. (NASDAQ:MLNK) has announced include changes in the management team. As such, the board has appointed Jim Henderson the CEO of the company. Henderson was previously the CEO of MLNK’s unit called ModusLink Corporation. The board also appointed Warren Lichtenstein to be the executive chairman of MLNK.

Leaving the management team of MLNK are Joseph Sherk, who was the principal financial officer and Alan Cormier, who was SVP and General Counsel of the company.

But there will be more movements in ModusLink Global Solutions, Inc. (NASDAQ:MLNK) over the company year as the company also plans to retrench 17% of its workforce.

Cost curtailment

In another measure designedto improve the bottom-line and repair the balance sheet, MLNK said it will aim to cutcosts related to selling, general and administrative (SG&A). The company is looking at automation of certain processes as a means to drop some SG&A costs. As such, the management is hoping to save $12 million annually.

Growth investment

In addition to trimming costs, ModusLink Global Solutions, Inc. (NASDAQ:MLNK) also outlined how it expects to generate $32 million in EBITDA annually.  The company plans to invest $20 million toward process, systems and people over the coming years.  That is where the management expects the EBITDA boost to come from.

All after the corporate realignments, including the reduction of square footage, MLNK believes that its supply chain unit called ModusLink Corporation will be in a position to turn profitable in F4Q2017.

But those corporate reforms will come at a cost. ModusLink Global Solutions, Inc. (NASDAQ:MLNK) expects to incur charges amounting to $13.7 million in F4Q2016 in relation to the corporate shakeups announced.


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