U.S. still ‘trouble’ for Extreme

The U.S. remains a “trouble spot” for Extreme Networks, the company reported along with its fiscal third-quarter earnings Thursday.

Revenue from the U.S. was down 6% from a year earlier and down 2% sequentially to less than $31 million in the company’s fiscal third quarter, which ended April 1, 2007. Revenue from the Americas outside the U.S., at $900,000, was roughly equal to its year-ago level.

Revenue from Extreme’s biggest market—Europe, the Middle East and Africa—was up 2% from a year earlier to more than $34 million. And total revenue of $85 million was down slightly from a year earlier.

“We’ve begun to level things off, but we’d like to have seen more revenue and bookings [in the U.S.],” said Mark Canepa, Extreme’s chief executive officer since last summer. “We’re making changes to turn this around.”

The Ethernet switch vendor attributed its domestic performance to the internal execution problems it has struggled with over the last several quarters. Canepa has made sweeping changes to the company’s strategy and corporate structure in recent months.

This week Canepa pointed to progress in the fact that the company’s flat third quarter (seasonally a slow one) followed five quarters of year-over-year revenue declines. “A number of improvements are beginning to show up in our numbers,” he said. “Some will take more time to see fruition.”

The company’s headcount rose by six to 880 in the quarter, as fewer engineers left the company than management had expected. Extreme slowed its hiring and expects headcount to decline in the near future.

Extreme also began work recently on a new fifth generation of chip sets, which will lead to increased spending on research and development in the second half of its fiscal year. The new chip sets, aimed at the carrier market, may take years to develop, the company said.