VA Linux Systems on Wednesday said it would exit the hardware business and cut its staff by 35%, or 153 jobs, under a restructuring programme that will focus the company`s attention on applications based on the Linux operating system.
VA Linux expects the new strategy would mean revenues would "significantly decline" because historically the company has generated a significant majority of its revenues from the sale of its computer hardware products.
The company said the changes would reduce its operating expenses and the amount of cash it needs to finance its operations. VA Linux said that after the change that amount - its cash burn rate - would be about $8 million a quarter and decline from there.
VA Linux said it expects to take a $10 million cash charge for the restructuring including the staff cuts, closure of facilities and asset write-offs.
The company will continue to accept hardware orders until 10 July 2001, with the goal of completing all deliveries by the end of the fiscal year, 28 July 2001.
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