Amber Networks Inc. blamed the softening economy today as it announced it has laid off about 12 percent of its staff (see Amber Cuts Workforce). The company's headcount now stands at 235 after the layoffs, says Alex Dobrushin, the firm's vice president of marketing.

The layoffs and cost cutting come less than one month after Mike Johnson -- a former Ascend Networks colleague of Amber Networks CEO Sam Mathan -- was brought on board as chief financial officer, a position that had been previously unfilled.

Amber has ambitious plans to compete with Cisco Systems Inc. (Nasdaq: CSCO), among others, in the edge router market. The company is marketing a carrier-class router whose primary feature is redundant routing cards that enable automatic failover. Only five months ago, Amber tripled the size of its corporate headquarters, moving to a 68,500 square-foot facility formerly occupied by Premisys Communications, in Fremont, Calif. (Networking Trivia nugget: Premisys was bought by Zhone Technologies Inc. Zhone is led by Mory Ejabat, the former Ascend CEO who was Mathan's boss at Ascend and who joined Amber Networks' board of directors in August 2000. Kevin Bacon could not be reached for comment.)

In a prepared statement, Mathan said the demand for the firm's products is still strong and the job cuts won't affect its ability to "continue with product deliveries and customer trials as planned."

Amber hasn't publicly said who its customers are, nor has it revealed which firms are evaluating its product. Dobrushin says the company is in "long-term trials" with nine carriers and "some of those are also investors."

Late last summer, the company closed on a $91 million round of financing. Light Reading reported that, given Amber Networks' high-profile board members and financial backers -- which include Williams Communications Group (NYSE: WCG), Enron Corp. (NYSE: ENE), and several investment bankers and venture capitalists -- the firm appeared to be on a fast track for an initial public offering (see Amber Suiting Up for IPO?). As of yet, Amber Networks hasn't made a move in that direction, and the firm hasn't spoken publicly about any new fund-raising efforts either (see System Startups 'Face Tough Year').

Dobrushin says Amber Networks is still fully funded and based its staff cuts only on the reductions in carrier spending.

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