Last week Tachion Networks fired most of its staff as its efforts to secure a fourth round of funding have not panned out. The firm has cut 169 jobs, according to officials at the New Jersey Department of Labor, whose representatives were on hand during the layoffs to assist those let go with enrolling in training programs and applying for unemployment benefits.

The company also appears to have told employees in a letter that it's shutting down -- although an official spokeswoman now says that such information was a miscommunication.

The telecommunications equipment maker won't confirm how many people it let go, only that it has "about a hundred" people still on staff, according to Tachion spokewoman Liza Kurtz.

Tachion gave its fired employees a letter, a copy of which was obtained by Light Reading. The letter, dated June 14, states that Tachion's efforts to land a fourth round of funding "have failed to come to fruition." The letter notifies employees that they will be paid through July 6 and they'll also be paid for earned, unused time off.

The letter also states that Tachion itself is shutting down. "Effective today, Tachion Networks, Inc. will shut down all of its operations," the letter states. "Both senior management and our current investors are continuing to scour potential funding sources for money for a reconstituted, much smaller company, but we cannot be assured that those efforts will be successful or will result in the re-hiring of some employees."

Kurtz confirmed the letter's authenticity. However, she denied that the company was shutting its doors. "That's incorrect. That should not have read that way," she says.

"At this point, we still have about a hundred people plowing ahead, and we're still exploring a bunch of financial alternatives. We are exploring a lot of options, and there's no way for me to tell you with any certainty what's going to happen."

What happens next is hard to guess, as Tachion's story has changed several times in the past year. Tachion's flagship product, the Fusion 5000, was designed to be a central office switch that combines frame relay, IP, ATM, SS7 signaling, voice services, and an integrated Sonet add/drop multiplexer. The company has not yet been able to ship that product commercially.

In April, Tachion said that instead of shipping a fully loaded box to its previously announced customers -- which included TelePacific Communications, ACD.net, and Gabriel Communications -- it had shipped an Internet offload application to several different, unnamed customers. Kurtz says Tachion's Internet offload product is being well received (see Another Tack for Tachion).

In May, Tachion CEO Jeff Matros told WallStreetReporter.com that Tachion had raised $84 million in funding to date, with $25 million of that coming from Lehman Brothers (see Tachion Gets $50M 3rd Round). Matros told the publication that Tachion was hunting for between $40 million and $50 million in new funding.

Tachion's investors include Lehman Brothers Venture Capital Group, Goldman Sachs & Co., J.P. Morgan & Co., Morgenthaler Ventures, Walden International Investment Group, WaldenVC, and Singapore's EDB Investments. Its board members include Matros, McLeodUSA (Nasdaq: MCLD) director Roy A. Wilkens, and Mike Odrich, Managing Director and Head of Lehman Brothers' Private Equity Division.

- Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com