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Sycamore Prepares to Shut Down

October 23, 2012 | Craig Matsumoto |

Sycamore Networks Inc. is finally calling it quits.

The optical networking company announced Tuesday afternoon that it's going to wind down operations.

Most of Sycamore's assets are being sold to private equity firm Marlin Equity Partners for $18.75 million, a deal expected to close before April. The business includes just about everything Sycamore does, including optical networking. [Ed. note: Marlin Equity is not to be confused with JT Marlin, the firm from the movie Boiler Room in which Vin Diesel plays a stockbroker. Just saying.]

Once that sale is done, Sycamore plans to start liquidation procedures. The Marlin sale and the liquidation are subject to stockholder approval.

Not included in the Marlin sale is IQstream, a traffic optimizer that targets mobile networks. Sycamore is trimming staff associated with IQstream but still hasn't determined if the business will be sold or liquidated.

Sycamore also announced a cash distribution of $2 per share, supplementing the $10 per share announced in September.

Sycamore shares were down 27 cents (4.5%) at $5.71 in early after-hours trading.

Why this matters
"What's to save Sycamore?" Light Reading asked that question as far back as 2002, when it was clear the former high-flier was getting battered by optical networking's post-bubble crash.

At the time, Sycamore had $1 billion in cash. Could it be put to use to revive the company? we wondered.

Apparently not. Although Sycamore has perked up in the last year or so with its software focus, the company never fully revived, subsisting on its installed base for optical cross-connects. In 1999, the days of irrational exuberance, Sycamore had a market capitalization of more than $14 billion without having turned a profit. Its market cap today is $173 million.

As for why all this matters: Light Reading was founded to cover the brave new world of optical networking, with Sycamore high on the list of subjects. Sycamore managed to stick around a lot longer than most, but it never really recovered after the bubble burst.

For more

— Craig Matsumoto, Managing Editor, Light Reading


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