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Axiowave on Track for More Funding

Light Reading
News Analysis
Light Reading
5/7/2002
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Axiowave Networks Inc. has raised $37 million in new funding, and company officials claim it's near to raising another $8 million more to close a total of $45 in its third round.

The size of the round and the fact that the news wasn't volunteered by the company appear to be hopeful signs, although Axiowave's still in pre-product mode and has much left to prove -- in a market that seems clearly down for the count.

The startup's founder and CEO Mukesh Chatter, who gained fame in selling Nexabit networks to Lucent for nearly $1 billion (see Lucent Loses Two Big Names and Lucent Cleans Up Core Routing ), says he's hopeful. "We're just one company, and you can't gauge anything by that, but we are beginning to get good traction. We are making substantially more progress than we were with prospective customers even three months ago."

Much remains to be seen. Axiowave doesn't expect to close its round for another six weeks or so. Chatter says the new round is coming from inside investors that have previously kicked in funding, as well as some outsiders, and matters must still be sorted.

Chatter won't name names, but in the past Axiowave has gotten funding from Madison Dearborn Partners and Soros Private Equity Partners, as well as from a range of other sources, including Chatter himself.

Since its founding in May 2000, Axiowave has maintained a cloak of secrecy only broken intermittently. A month ago, for example, word of a layoff leaked out (see Stealthy Startup Leads With Layoffs), forcing Chatter to acknowledged that Axiowave had discontinued work on an ultra-dense crossconnect switch meant to be part of its product line. About 30 employees were laid off as a result. Chatter said yesterday that the census remains at about 150 and there are no further layoffs in sight.

Sources say Axiowave is making a partially optical multiservice core switch designed to compete with gear from Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Équipe Communications Corp., Nortel Networks Corp. (NYSE/Toronto: NT), and a slew of others (see A New Optical Taxonomy, page 9}).

Chatter says the new funding, when finalized, will be used to create a sales infrastructure to support beta testing and shipment of Axiowave's gear, due out later this year. Money will also be used to continue R&D.

Axiowave will not have a booth at this year's Supercomm 2002 trade show in Atlanta, however. "We'll be there seeing and meeting and talking, but it seems the idea of showing your gear in demos doesn't carry the weight it used to," Chatter says. The only thing that matters is to get a product into the hands of the right customers and get it working, he asserts. The rest will come.

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com For more information on Supercomm 2002, please visit: Supercomm Special

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xnx2
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xnx2,
User Rank: Light Beer
12/4/2012 | 10:24:01 PM
re: Axiowave on Track for More Funding
"
> I wish Ascend did more than add 1 Bil$ to LU's
> bottom line (I could get out of LU!). At this
> rate, it would take more than 24 years for that
> acquisition to simply break-even. So in the
> eyes of LU investors, Ascend folks don't
> exactly look like any champs either.

It is that bad actually - as far as I remember it was all stock acquisition, stock was depereciated 90% since, but booking is still counted in cash, so it does not look that horribly bad after all.
"

Precisely the same thing is true for Nexabit. At the real cost to LU, simply the ampic and the fabio chipsets were a bargain. These chips can be used in many applications.

-xnx2
netskeptic
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netskeptic,
User Rank: Light Beer
12/4/2012 | 10:24:05 PM
re: Axiowave on Track for More Funding
> I wish Ascend did more than add 1 Bil$ to LU's
> bottom line (I could get out of LU!). At this
> rate, it would take more than 24 years for that
> acquisition to simply break-even. So in the
> eyes of LU investors, Ascend folks don't
> exactly look like any champs either.

It is that bad actually - as far as I remember it was all stock acquisition, stock was depereciated 90% since, but booking is still counted in cash, so it does not look that horribly bad after all.

I do not thing that you are right about this message board attitude towards Nexabit either - I am just extremely curious to know what was it (e.g. I heard a few pretty good opinions about NX from people I learned to trust, at the time of acquisition I thought that it was a very good thing for LU) and why it did not came through. I suppose I am not alone here.

So, I am really thankful to xnx2 for posting info about box, its status, progress etc.

Thanks,

Netskeptic
simpleton
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simpleton,
User Rank: Light Beer
12/4/2012 | 10:24:14 PM
re: Axiowave on Track for More Funding
As a LU shareholder, I am infuriated at the gross incompetence of LU top management in destroying that company and as it has become clear over the last couple of years, destroying many others by acquiring them and not managing those acquisitions.

In a seperate thread somebody raised the question of whether it was LU's acquisition of Ascend that hastened LU's downfall or Ascend's! In that thread, some speculated that Ascend was well on its descent and was an indigestible acquisition for LU.

While couple of Nexabit people gave some good information and atleast one Ascend person provided good information, many of the posters here clearly Nexabit haters, not criticizers, were crude, venomous and downright indecent and added nothing to this conversation. Today on NPR's Morning Edition's sports segment, someone mentioned that he was embarassed by the NY Yankee hater's in Boston because it showed their inferiority complex. It would seem like this is applicable to these Nexabit hater's also.

I wish Ascend did more than add 1 Bil$ to LU's bottom line (I could get out of LU!). At this rate, it would take more than 24 years for that acquisition to simply break-even. So in the eyes of LU investors, Ascend folks don't exactly look like any champs either.

Based on the information provided here and the LU website, it is clear that Nexabit did have something that LU thought was worthwhile in keeping around. It is also clear from the virulence shown here, that while the Nexabit people bailed out, nobody at the original Ascend was going to do anything to take that box further. That combined with the fact that without the original engineers, there would be huge knowledge gap that would make this at best an uphill battle to make this box pay for itself. This has been the case on much smaller products I have worked on, so it is not surprising that the Nexabit box has not exactly been a supernova.

Its time this thread wound down - I sure ain't coming back! So good luck to you all.
webslinger
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webslinger,
User Rank: Light Beer
12/4/2012 | 10:24:17 PM
re: Axiowave on Track for More Funding
xnx2,
the most accurate descpition of the Nexabit box I have ever heard from a non nexi or LU person. From what I know the switch and the IOP are intact so the TMX880 is really a NX64000 with hopefully better software and new IOA IOD cards and of course lots more features, gotta have more features.

be interested in how you know so much.
Lightmare
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Lightmare,
User Rank: Light Beer
12/4/2012 | 10:24:19 PM
re: Axiowave on Track for More Funding
Ditto on the topic.

Is this the only guy/gal who does not know the nexabullshit switch is about as useful as an 8 track tape player? Sure it's cool to look at and one can only marvel at the technology but compared to real revenue generating products, it's a POS.
netskeptic
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netskeptic,
User Rank: Light Beer
12/4/2012 | 10:24:20 PM
re: Axiowave on Track for More Funding
> OZ is not coming back. It has hit the scrap pile.

Huh ? Never heard anything about Oz beyond it being some canceled ATM switch, even never worked for LU.

Thanks,

Netskeptic

hrdhtr
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hrdhtr,
User Rank: Light Beer
12/4/2012 | 10:24:37 PM
re: Axiowave on Track for More Funding
You guys ought to do as the wizard says and
"Click your heels together three times"

OZ is not coming back. It has hit the scrap pile.
The portfolio has been defined and there are alot of people working hard to get the job done.
You gotta suck it up & move on, or be gone.





let-there-be-light
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let-there-be-light,
User Rank: Light Beer
12/4/2012 | 10:24:48 PM
re: Axiowave on Track for More Funding
Oh, forgot to mention..

Partly with the $900 you paid for this PC (a lot of money back then) and partly with the credibility derived from having you as a customer, your dear PC salesman abandons his business, takes most of his key people with him and set up shop right across the road from where he used to be.

He also tries to take a few flowers from your garden to decorate his new abode at the same time.

FInally, to add insult to injury, he goes round telling everyone, "Is it my fault that idiot wanted a working PC WITH operating system? Just because he paid me so much money doesn't automatically make me Bill Gates. Let him design his own operating system if he needs one."

Over and Out.
simpleton
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simpleton,
User Rank: Light Beer
12/4/2012 | 10:24:50 PM
re: Axiowave on Track for More Funding
Lightmare:

Nobody is forcing you to read this. Sounds like you are bitching with no facts to provide. Some of the info is quite good even though we have to suffer people like you.
Lightmare
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Lightmare,
User Rank: Light Beer
12/4/2012 | 10:24:51 PM
re: Axiowave on Track for More Funding
I have to throw the towel in on this one. It comes as no suprise to me why so many companies are in such deep sh*t these days.

But I guess when product don't sell everyone has ample time to post on message boards and talk about the good old days.

I don't care about could have been, should have been, might have been, awesome technology, great traction, flag(sinking)ship products, potential cisco killers, up rounds, or sweet spots.

All I care about is REVENUE! and you either got it or you don't. If it's not generating REVENUE or will not be generating REVENUE in the near future, you may as well save some money and shut the lights off and say "bye-bye"
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