VIA NET.WORKS, Inc., which earlier this year announced changes in its business strategy designed to generate higher margins and increased revenues, today stated that implementation of the new strategy at its U.K. operation, its largest operation, would result in head count reductions; a decrease in recurring operating expenses, and an expected improvement in cash flow.
The Company also said that the actions at its U.K. unit, which accounts for about 25% of total revenues, should result in a restructuring charge of approximately $1.2 million (728,000 pounds Sterling), to be taken in the second quarter.
Specifically, VIA said its U.K. operation would:
* Eliminate approximately 40 positions affecting all departments. The reorganization is expected to be completed by June 2004.
* Decrease operating expenses to approximately $9.6 million (5.6 million pounds) in 2004, a reduction of about 38% from approximately $15.7 million (9.2 million pounds) in 2003.
* Experience an improvement in annual recurring cash flow of approximately $2.2 million (1.3 million pounds).
"VIA is at a very important point in its development, as we position the company to be the leader in providing business communications solutions to the fast-growing small and medium enterprise market," stated Rhett Williams, the company's Chief Executive Officer. "Over the past year and a half, we have built a solid operation on which to build a healthy and scalable business, including refocusing our strategy with the realities of the industry's economics."
Among the operational changes made, the company improved processes and controls, implemented a new back office, and outsourced network management and production functions.
Mr. Williams added that VIA now is focusing on the second stage: implementing the strategic changes to its business model. In refocusing its strategy, VIA is de-emphasizing low-margin dial-up and leased line access business, while emphasizing higher-value, higher-margin offerings -- including web hosting and Internet security -- that it can deliver on its own platform. To drive the new focus, VIA has realigned its sales activities into two channels:
* "Industry Solutions," designed to provide customized solutions through a restructured industry-focused sales force, and
* "VIA Express," through which customers can obtain automated and bundled web-based products and services, and which will leverage the company's recent acquisition of the AMEN hosting platform.
"The implementation of our new business model is an important component in reaching our financial performance objectives," Mr. Williams stated. "We expect to generate the bulk of our growth over the next several years through the introduction of higher-value products and services, and our restructured sales approach is an important component of that process. Across our footprint, VIA will continue to focus resources in our country operations around the new VIA Express and VIA Solutions business units."
About VIA NET.WORKS, Inc.
VIA NET.WORKS, Inc. (Nasdaq: VNWI; Euronext) is a leading provider of business communication solutions to small and medium-sized businesses in Europe and the United States. The Group serves over 200,000 businesses across Europe with a comprehensive portfolio of business communications products includes hosting, security, connectivity, networks and voice. In January 2004 VIA acquired the European web-hosting company, Amen -- www.amenworld.com. Website: www.vianetworks.com
