April 10, 2013 / 11:45 AM / 4 years ago

UPDATE 2-DragonWave amends deal with Nokia Siemens

3 Min Read

* Says Nokia Siemens to make cash payment of 10.6 mln euros

* Expects operating costs to fall by about 3 mln euros per qtr

* To pay termination fee of about 7 mln euros through FY14

* Shares rise 9 pct in Toronto, 10 pct on the Nasdaq (Adds DragonWave CFO comments, updates share movement)

April 10 (Reuters) - Telecom network equipment maker DragonWave Inc said it amended its deal with Nokia Siemens Networks to reduce operating costs and cut three senior management positions.

Shares of DragonWave rose 9 percent to C$1.74 on the Toronto Stock Exchange. They rose 10 percent on the Nasdaq.

Cash-strapped DragonWave, which has been trying to reduce costs since it acquired Nokia Siemens's microwave technology business last June, said in March that it would cut costs further but did not specify what the measures were.

The company cut 116 jobs in Ottawa and Israel in 2012.

According to the renewed deal, Nokia Siemens will make an immediate cash payment of 10.6 million euros ($13.8 million) to DragonWave, clearing the contingent receivable on the Ottawa-based company's balance sheet.

DragonWave said the companies have ended the Italian services agreement, under which Nokia Siemens provided research and development and certain other services to DragonWave since June 2012.

DragonWave expects operating costs to fall by about 3 million euros per quarter.

"The 3 million euros relates to the termination of the services arrangement that we had with Nokia Siemens Networks for R&D services," CFO Russell Frederick told Reuters.

DragonWave said Nokia Siemens will take on additional commitments and costs.

The company, which uses microwave technology to move data between cellular towers and telecom networks, warned in March that fourth-quarter revenue would miss its forecast due to lower sales in the unit.

The unit contributed $25.6 million, or about 67 percent, to DragonWave's revenue in the third quarter.

DragonWave said on Wednesday it expects to pay a termination fee of about 7 million euros over the balance of fiscal year 2014.

The company cut senior management positions related to investor relations and some corporate functions, CFO Frederick said.

The company said it would continue to be the preferred supplier of packet microwave and related products to Nokia Siemens, and both companies would jointly coordinate technology development activities.

The stock, which has lost more than a third of its value since it lowered its revenue estimate last month, was trading at C$1.65 on the Toronto Stock Exchange on Wednesday. ($1 = 0.7658 euros) (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Roshni Menon)

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