After 14 years in business, Lightwave Microsystems Corp. has closed down.

The component maker's final day of operations was last Friday (September 27), according to its president and CEO John Midgley. Sources say the decision came as a surprise to the 240 people who lost their jobs that day.

Midgley declined to elaborate, simply citing closure "due to market conditions".

Although it has a much longer history than most startups, Lightwave Microsystems as we know it came into existence in mid-1998. Its original idea -- developing polymer-based thermo-optical switches and other devices -- had run into trouble, and the company looked ready to keel over and die.

At that point, Midgley, then a consultant, was called in to give some advice. To cut a long story short, he ended up redirecting the company's efforts towards a shorter-term goal -- making Arrayed Waveguide Gratings (AWGs) -- and becoming the president and CEO.

In this venture, Lightwave Microsystems appeared to be successful, becoming a prominent vendor of AWGs, close behind the leaders JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU), NTT Electronics Corp. (NEL), and Hitachi Cable Ltd. It also took important next steps in developing integrated optical components, by combining AWGs with other components, such as variable optical attenuators (VOAs) and detectors.

In total, Lightwave Microsystems raised more than $123 million for the development of AWGs, not including an unannounced investment from a strategic partner, probably Corning Inc. (NYSE: GLW), sometime last year. It even enjoyed a spell on Light Reading's list of Top Ten Private Companies (Note: The new Top Ten list is going to be released later today, and Lightwave Micro, obviously, will not make an appearance).

"There was no problem with products or customers," says a high-level source within the company, who asked not to be named. "But it takes revenues to survive, and that just trickled in."

This story will be updated as more information becomes available.

— Pauline Rigby, Senior Editor, Light Reading
www.lightreading.com