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Xalted Axes Staff

Light Reading
News Analysis
Light Reading

Plano, Texas-based Xalted Networks Inc. continues to shed staff as it struggles to complete a second round of funding.

The telecom equipment maker that once employed some 130 people now has a headcount of 52, according to sources close to the company. Xalted cut about 30 jobs in the second half of 2001. It cut another 48 jobs earlier this month and did not offer those employees a severance package, according to some who were let go.

Xalted board member Eric Zimits, a managing director at Granite Ventures LLC, confirms the layoffs but says he's not sure of the exact number let go.

Getting a product to market with a smaller staff is just one of Xalted's challenges. The company was once building what it called an optical access router, a box meant to replace digital loop carriers by offering broadband data services and traditional voice services over a service provider's existing copper and fiber facilities.

The product, however, still has not entered planned trials with e.spire Communications Inc. (Nasdaq: ESPI) and XO Communications Inc. (OTC: XOXO) and the company seems to be several months away from booking significant revenues, Light Reading has learned.

In order to get additional support from its VCs, Xalted has adopted several measures to cut its burn rate significantly, including moving its software development to India, say sources close to company founder Bob Kondamoori.

"[Xalted] is just entering its beta phase right now so it's still early on," says Zimits. "Any changes to features and product direction and things like that will be subtle. It's what you'd expect in building this sort of broadband access product in this market."

In late February, the company brought in Allen Adams, the former senior VP of strategic planning and business development at DSC [now Alcatel SA (NYSE: ALA; Paris: CGEP:PA)], to serve as interim CEO. Adams, however, never officially took the top job. "Allen was doing some work for the company, and now he's not as active as he was, but I think he still wants to the company to succeed," says Zimits.

Prior to that, Pat Rockford, Xalted's VP of sales, left the company to join Photuris Inc., another startup. Though Rockford left weeks ago, Xalted managers maintained that he was on a leave of absence until recently, according to sources familiar with the situation.

In September 2001, Xalted announced it closed an "oversubscribed" $21 million Series A round (see Xalted Raises $21 Million). Its investors include BlueStream Ventures, Granite Ventures, Charter Venture Capital and Alliance Ventures. At that time, the company said it was in the process of raising its Series B round, which was expected to close by the end of 2001.

In February 2002, the Dallas Business Journal reported that Xalted had closed another $10 million round. Zimits says the company's existing investors put up $10 million and Xalted is still looking for another $15 million elsewhere to complete the second round.

Xalted's managers declined to comment for this article. "We can't comment on anything until after we issue the press release that we're putting out on Friday," says Keith Bradshaw, Xalted's director of marketing and product management.

— Phil Harvey, Senior Editor, Light Reading

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User Rank: Light Beer
12/4/2012 | 10:47:51 PM
re: Xalted Axes Staff
for a smaller sign...Seems like everyone in Dallas viewed the monster sign and prime tollway realestate as more sizzle than steak...

Also I believe there is some sort of mandatory severance for companies who layoff more than 50% of their workforce in less than 6 months. Don't know the details though.

User Rank: Light Beer
12/4/2012 | 10:47:48 PM
re: Xalted Axes Staff
It's not surprising that Xalted is having difficulties. Their management little to no startup experience. Any investoor would be wary of that.

User Rank: Light Beer
12/4/2012 | 10:47:47 PM
re: Xalted Axes Staff
If you are interested in a presentation which the CTO gave to the Dallas chapter of IEEE - here is the link:


To me it sounds like a reasonable vision, maybe a bit to early for the RBOC's to bite off yet?

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