Peregrine Systems Inc plans to almost halve its workforce in the next few weeks but claims that the loss of 1,400 jobs will have a "minimal effect on customers" and the level of support and services it offers. The new management team at the scandal-engulfed company is also planning similar cuts in its operations outside North America.

With the San Diego, California-based company's survival at stake following disclosure of a financial scandal involving recognition of $100m of dubious revenue, CEO Gary Greenfield felt he had no alternative but to cut staffing levels built up during an acquisition spree that saw it buy 16 companies since in the last five years. The cut-backs will include consolidation of 49 office locations in North America.

Certainly the claim by CEO Gary Greenfield that reducing the workforce by 48% to 1,500 will have no effect on customers suggests that the previous management paid little attention to operational efficiencies.

Greenfield said the company has to take difficult but necessary steps to reposition the company in line with current market conditions, and said the workforce reduction will enable it to sustain long-term viability. He said he wants a lean organization with a "singular focus on infrastructure management."

In essence, the previous management had created a vast sales network through which it planned to sell an increasing range of applications, as witnessed by its $1.09bn acquisition of CRM vendor Remedy Corp a year ago. However, Greenfield, who has already sold off the firm's e-commerce operations, has signaled his intention to dispose of Remedy, which is being operated as an independent unit.

By concentrating on infrastructure management, where Peregrine can boast 92% of Fortune 500 companies as customers, the company has abandoned the previous management's inflated ambitions and the expensive infrastructure required to support them.

Peregrine shares rose 7.8% to $1.25 on the news, but with the SEC probing the company, Peregrine might still be a long way from safety.

© ComputerWire