Amid slowing demand for space, Dallas-based data center REIT company CyrusOne has announced it is laying off 12% of its workforce – about 55 employees.
In the announcement made Monday, CyrusOne stated that the move will allow it to save about $10.7 million annually. It also stated that affected employees would receive severance, as well as customary transition assistance. The layoffs are expected to cost the company about $5.9 million in the first quarter of 2020.
“We believe it is appropriate to reduce our cost structure to more closely align the business with current market conditions," said CyrusOne President and CEO Gary Wojtaszek in a prepared statement. "We continually evaluate our expense structure and have been very proactive in identifying opportunities to generate efficiencies, which this action further supports."
According to the Dallas Business Journal, CyrusOne shares dropped by about 5% during early trading. The company is planning to release fourth quarter results in February.
"We believe it is appropriate to reduce our cost structure to more closely align the business with current market conditions."
Other companies in the data center industry have also seen slowdowns in demand in recent years. According to research and advisory firm Gartner, data center systems spending in 2018 grew by about 11.3%. However, that number fell to 4.2% in 2019 and is expected to have -3.9% growth in 2020.
In addition to the layoffs, CyrusOne announced that its European president Tesh Durvasula would be stepping down in March to “pursue other interests,” a move which the company said was mutually agreed upon. CyrusOne Managing Director of Europe Matt Pullen will be taking over the role.
“This step to rightsize the organization, while not an easy decision, will result in enhanced margins and higher profitability over time, strengthening our position in the current environment,” Wojtaszek stated in a press release.
CyrusOne was founded in 2000. After being acquired by Cincinnati Bell for $52 million in 2010, the company went public in 2013, selling at $19 per share. CyrusOne operates nearly 50 data centers across the globe. According to the DBJ, the company has a revenue of about $821 million.
