Network Photonics Inc. says it will lay off 45 employees and will be closing its Santa Rosa, Calif., offices, as the company goes through a major strategic revision of its product plans.

According to CEO Steve Georgis, Network Photonics is scaling back its plans to build a managed-wavelength optical switch for metro-market carriers, and instead plans to deliver a smaller, simpler box that focuses on the company's optical smarts.

Potential carrier customers, Georgis says, told Network Photonics they were interested in the company's CrossWave switching technology, but not the full-blown system Network Photonics had planned to build.

"They [the carriers] told us they just wanted the physical-layer stuff and would integrate that with existing applications and systems," says Georgis, who says that building such a simpler system "rendered a lot of what we were doing in Santa Rosa as unnecessary."

Georgis says the re-trenching of plans shouldn't slow down Network Photonics' early 2002 planned shipment date: In fact, "it may accelerate [delivery], since it's a simpler product."

However, Georgis couldn't predict whether a simpler -- and cheaper -- product would also reduce Network Photonics' planned revenues.

"It might produce more revenue, since it would be a cheaper but higher-volume product. But nobody knows what anybody is going to buy next year."

Even though Georgis claimed once that Network Photonics had raised enough cash to get its product to market (see Network Photonics Raises $106.5 Million), he says it's prudent to try and stretch the company's $100 million-plus in funding.

"It's a financial decision, as well as a strategic decision," Georgis says of the new product direction. "The bad news is that it makes a number of employees redundant."

Though some of the California employees will be offered jobs at the Boulder, Colo., headquarters, most will be let go, says Georgis, who flew to Santa Rosa to announce the layoffs on Thursday. When Network Photonics opened the Santa Rosa office last year (see Talent Search Sends Startup to Sonoma), it was in response to the tight optical industry employment pool, a situation that "no longer exists," he says.

Instead of issuing a press release, the company first told local newspapers in Boulder and Santa Rosa about the layoffs on Thursday. "We felt this was a local story," says Georgis.

- Paul Kapustka, Editor at Large, Light Reading
http://www.lightreading.com