Legato has been systematically winnowing down its employee base over the past year. Last July, Byte and Switch learned that the company had quietly laid off 85 employees (see Legato Thins the Herd). At the time, a company spokeswoman said the action brought the companys headcount to 1,639, meaning that the shearing has continued since then.
Legato insists the announced cuts wont hurt its pro forma revenues, which it expects to grow by 20 percent in 2003. So can we assume that if Legato continues to grow its sales, it will cut even more jobs?
While Legato's employees probably aren't happy with the trend, industry analysts congratulated the company on Thursday for its cost-cutting measures.
"After a long period of speculation and distraction, we think this move likely signals an increased intensity on building shareholder value through old-fashioned organic revenue growth and improved margin leverage," writes RBC Capital Markets analyst Robert Montague in a note Thursday. The analyst firm raised its earnings estimates for Legato on Thursday, boosting its price target for the company to $8 a share. RBC's fiscal year 2003 revenue estimate remains at $314 million, but it doubled its fully taxed EPS estimate to $0.08 per share (from $0.04 per share previously).
Eugénie Larson, Reporter, Light Reading
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