Shares of SolarCity Corp (NASDAQ:SCTY) are higher by 1.17% to $23.29 in mid-day trading on Tuesday following a report from Mercurynews’ Louis Hansen stating that the company is laying off up to 108 employees in an attempt to cut costs as it prepares for a takeover from Tesla Motors (NASDAQ:TSLA).
The job cuts, which according to the report are expected to be permanent, would affect 80 employees from the company’s San Mateo headquarters and another 28 from its San Francisco facility. The layoffs are expected to begin Oct. 19, and will include legal and accounting services, inside sales, directors of customer service, legal operations and recruiting. The cuts will also affect several engineers and a vice president of information technology, the report said.
SolarCity announced the layoffs in an Aug. 17 filing with the Securities and Exchange Commission, saying that it expects to incur between $3 million and $5 million in restructuring costs, primarily consisting of severance benefits. The company also cut the salaries of co-founders Lyndon and Peter Rive from $275,000 to $1.
The Silicon Valley-based firm, the largest residential solar installer in the United States, fell short of expectations last quarter, reporting a loss of $250 million, almost $100 million more than the same period a year ago. EPS came in at a loss of $2.32 compared with $1.61 on a year-over-year basis. For the current quarter the company expects a loss of $2.55 to $2.66 per share. SolarCity agreed in late June to a $2.6 billion purchase by Tesla Motors. The merger, which according to Morgan Stanley’s Adam Jones, will exacerbate cash burn, and will not improve access to the capital markets, is pending approval by shareholders and regulators.