Highwinds Does Reorg, Cuts Staff By About 10%

Highwinds_logo.jpg Highwinds has confirmed that it made cuts to their headcount last week across all divisions of the company. While the company did not confirm the numbers, I heard about twelve folks were let go, which would be about 10% of the company. Highwinds say many of the cuts were due to consolidating their operations in Phoenix via some of their recent acquisitions.

While the company made it clear that the cuts were not made for financial reasons and that they plan to re-hire for some of the positions, some have speculated that investors could be instructing them to keep their costs down for the short term so that Highwinds can refinance their debt. While that's always possible, the company did go on record to say that, "we not in the market to refinance as our interest rates and credit agreement are too favorable". Highwinds does not rely on content delivery services as a large portion of their revenue and has good cash flow, expecting to be EBITA positive this year. The cash they generate comes from services outside of CDN and the CDN business they are targeting is for the most part not the low priced M&E business.

To date, Highwinds has raised $130M and the recent $70M raised went to acquisitions and debt. It plans to evaluate potentially making some small strategic acquisitions over the course of this year that would help layer more applications on top of their CDN services. If Highwinds can get through the next 18 months in a bad market, they should have a good shot at being around for awhile since they have a very diversified revenue stream and aren't selling CDN services based on a lowest price point.