NEW YORK—When Unisphere Solutions Inc. (http://www.unisphere.cc) spent $1 billion snapping up a trio of equipment startups last year it was supposed to be buying admission to the U.S. telecom market.

What it got instead, Light Reading has learned, was a bagful of problems—ones that could potentially interfere with plans by parent company Siemens AG (http://www.siemens.com) to spin off Unisphere in an IPO.

Of the three outfits that it bought, only one, Redstone Communications, has been a home run for Unisphere.

The Castle Networks product is in trials, although Unisphere is said to be holding up the general availability of the product in order to add new Class 4 and 5 switch features that have been demanded by a key account. Unisphere says it is adding features, but that the process isn’t delaying the product rollout. “We were planning to do this anyway. And the good news is that we’re still way ahead of the competition,” says Pedro Colaco, director of IP telephony at Unisphere.

But Unisphere’s biggest woes by far have come courtesy of its Argon Networks acquisition. It bought the company based on its ability to deliver a unique terabit switch—one that could be configured port by port to handle either IP packets or ATM cells. The idea was that the device would free carriers from having to choose between the two technologies when designing their networks. Instead, they could use one product to support both protocols, and migrate from one to the other as necessary.

Nice idea. Didn’t work.

Light Reading’s sources say that Unisphere has now entrusted the former vice president of engineering at Redstone, Chris Lawler, with fixing the Argon mess. Lawler has a reputation as the “Red Adair” of ASIC and software problems. “If anyone can fix the problem, that guy can,” says an executive at a major networking vendor, who requested anonymity.

Even so, fixing the problem has meant that Unisphere has had to compromise the product’s functionality. The switch will still support ATM and IP on each port, but it won’t support full ATM switching. “The level of integration has changed. It will be an IP switch with a basic level of ATM,” says Dana Rasmussen, vice president of product management, data service division at Unisphere. “I can’t say we haven’t had technical problems with the product.”

All of this work is delaying the product’s launch by more than a year. Argon originally said it would be in beta in the first half of 1999. It now won’t ship until the end of this year.

Observers think the silicon problems were aggravated by the fact that Argon’s employees were fully vested when Unisphere acquired the company. “That was a big mistake on Siemens’ part. They lost all the talent,” says Light Reading’s source. The same executive thinks Unisphere’s staffing problems could be about to get a lot worse. “Redstone employees will vest in eight months. Castle [employees] have four months to go. If [Unisphere] doesn’t go public before then they will have real trouble keeping them.”

Unisphere says that staffing has not been a problem. “We’ve had only a four percent attrition rate so far,” says Lisa Allocca, vice president of solutions marketing at Unisphere.

—Stephen Saunders, US editor, Light Reading, http://www.lightreading.com