Brightpoint has outlined a debt reduction plan that will see 220 staff axed from across its global operations and its Polish and Turkish business units shut completely.
It will also put a freeze on recruitment across its divisions, and halt senior executive cash bonuses and stem general staff bonuses.
Brightpoint chairman chief executive Robert Laikin said: “2009 will be the year of blocking and tackling at Brightpoint. Given the turbulent times ahead, we are focused on reducing the debt on our balance sheet, reducing spending on a global basis, generating positive cash flow, and ramping up the recently awarded deals and winning new business globally.
“I firmly believe the successful performance in these focus areas will reduce our overall risk profile, enhance our balance sheet and build long term shareholder value.”
The US distribution giant, which posted a 36 per cent slump in Q4 2008 revenues compared with the same period a year ago, said disruptions in credit markets and reductions in global economic activity towards the end of 2008 had hit stock markets, the mobile industry and its own market value badly.
As a result, it said the goodwill afforded its EMEA net assets “exceeded the fair market value”, resulting in an impairment charge of $325.9 million. Brightpoint said the goodwill allocated to the EMEA reporting unit was primarily related to the acquisition of Dangaard Telecom in July 2007, and the subsequent impairment charge was down to adverse supply/demand conditions in EMEA.
Brightpoint’s Q4 2008 revenue was $1 billion. It said the 36 per cent annual decrease was down to fewer shipments and price pressure as a result of the global economic slowdown. Brightpoint sold 22 million mobile phones and accessories during the period, down 18 per cent year-on-year and eight per cent sequentially.
Revenue was down 15 per cent compared with Q3 2008 as Brightpoint shifted its business mix away from distribution towards logistics services.
It posted a loss of $344.4 million for the period, compared with operational profits of $14.1 million during Q4 2007 and $6 million in Q3 2008. Its Q4 loss included the $325.9 million goodwill impairment charge.
Total debt was $176.4 million at December 31, 2008, compared to $185.5 million at September 30, 2008, and $460.9 million at December 31, 2007.
EBITDA was $13.8 million for the fourth quarter of 2008 compared to $41.9 million for the fourth quarter of 2007 and $24.4 million for the third quarter of 2008.
Brightpoint chief financial officer Tony Boor said: “I am pleased that we were able to meet our aggressive year-end debt target of less than $200 million and that we achieved our previously announced spending reductions for the second half of 2008.
“Given the uncertainty caused by the turmoil in the global economy, our focus in 2009 will be on the things within our control: managing our balance sheet, reducing our debt, and controlling spending.”