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AVG Restructuring SMB Business, Laying Off 35

AVG Technologies is restructuring its managed service provider-centric SMB business division and laying off 35 employees as the unit struggles to meet the company's overall growth goals.

"As we discussed in the last earnings call, our expectation of the uptake of our cloud-based services was not where we wanted it to be as a result of our existing customers' commitment to our traditional on-premise product," said Gary Kovacs, CEO and managing director, according to a Seeking Alpha transcript of AVG's third-quarter earnings call Wednesday.

"To fix this, we have taken specific actions to improve our go-to-market strategy, including a significant restructuring and streamlining of the business and further simplification of our products to make it even easier for our resellers to go out with our products to serve their end customers' needs. These restructuring and leadership changes, we believe, will put us in the right position to capitalize on a large and growing opportunity," he said.

CFO John Little explained the restructuring would include "releasing approximately 35 employees," outsourcing a portion of the help desk and restructuring the management of the division. Little said the moves would save about $3 million over the next 12 months.

The SMB segment contributed $16.6 million of AVG's $108 million in revenues in the quarter, an increase of 13 percent for the SMB side. Part of the pressure for faster performance from the SMB unit comes from AVG's strategic exit from the third-party search business, which is dramatically reducing the company's revenues.

Despite the cuts, Kovacs said SMB remains a key focus area and pointed to the September release of AVG Business Managed Workplace Version 9.2 as evidence of AVG's ongoing efforts. "We believe strongly in this market, and we'll continue to invest as we have been in anticipation of accelerated growth in the future," Kovacs said.

AVG made a big move in the MSP market in 2013 with the acquisition of Level Platforms and made a major effort to expand the opportunity for those partners and its existing base of partners selling its cloud-based security solutions in the last year. However, the last two earnings cycles have revealed the company's challenges in the SMB market.

Posted by Scott Bekker on November 05, 2015 at 12:11 PM