Sonos Announcements and Restructuring
The manufacturer Smart Speaker Sonos announced the dismissal of about 200 employees, which is almost 12% of his labor force.
Provisional Director General Volume Conrad revealed a plan for restructuring in a letter to the staff that SONOS published on your website on Wednesday (February 5). As of September 28, the California company in Santa Barbara had 1708 full-time employees, according to industry data.
“I made a very difficult decision to eliminate about 200 positions in our company … There is no denying that this is a terrible result,” said Conrad, who took on the role of temporary General Director less than a month ago after Patrick Spence stepped down as General Director and a member of the board. Conrad had been an independent member of the board of directors since 2017.
Challenges and Company Performance
This decision comes on the heels of a problematic app update last year that reviewed Sonos’ product ecosystem.
The company dismissed 100 employees or around 6% of its workforce in August. In that same month, Spence mentioned, “I asked Nick Millington, the original Sonos Experience software architect, to do everything possible to resolve issues with our new application.”
Last month, Sonos stated that Spence’s departure was “not connected” to the fiscal results for Sonos (the three months ending December 28, 2024), which are set to be released on Thursday (February 6).
“It is impossible to circumvent the fact that this is a terrible result.”
Volume Conrad, Sonos
The income of Sonos fell 8% year-over-year in the fourth year 2024, ending on September 28, totaling 1.52 billion US dollars. The company attributed this decline to “weaker demand amid challenging market conditions and issues arising from our recent app rollout.” Income for the financial quarter dropped 16% to 255.4 million dollars, down from 305.1 million dollars the previous year.
For the upcoming financial quarter, Sonos’ income is projected to decrease by 15% year-over-year to 520 million dollars, down from $613 million, according to estimates compiled by Factset. It is expected that net income, excluding GAAP, will fall 65% to 37 million dollars, compared to $106 million in the previous financial year.
In his letter to staff, Conrad explained that the company’s restructuring is aimed at optimizing operations by creating smaller, more purpose-driven teams.
“We have become mired in too many layers that made collaboration and decision-making more difficult than it should be. Therefore, we are reorganizing into flatter, smaller, and more focused teams across the company,” Conrad stated.
The organization of the company’s product development will undergo significant changes by transitioning from dedicated business units for specific product categories to functional groups encompassing hardware, software, design, quality, and operations.
“This simpler organization will allow inter-functional design teams to collaborate more effectively to enhance our core offerings and deliver new products. Being smaller and more focused will require us to perform better in setting priorities—recently, we allowed too many projects to progress under the cloud of half-completions. We are committed to rectifying this.”
Speculation around the sale of the company has grown in recent months, with Bloomberg suggesting that Spotify and Amazon are the most likely candidates for acquisition, each offering distinct advantages.
Other potential buyers include Samsung Electronics, which has struggled to gain traction in the home speaker market despite owning the Harman brand. Bloomberg‘s Mark Gourmet noted that while larger tech companies like Apple, Google, and Meta could be potential buyers, they are unlikely candidates given their existing strategies and past relationships with SONOS.
Following app debacle, Sonos slashes 12% of workforce amid takeover talks
