& cplSiteName &

Sycamore Prepares to Shut Down

Craig Matsumoto
10/23/2012
50%
50%

Sycamore Networks Inc. (Nasdaq: SCMR) is finally calling it quits.

The optical networking company announced Tuesday afternoon that it's going to wind down operations.

Most of Sycamore's assets are being sold to private equity firm Marlin Equity Partners for $18.75 million, a deal expected to close before April. The business includes just about everything Sycamore does, including optical networking. [Ed. note: Marlin Equity is not to be confused with JT Marlin, the firm from the movie Boiler Room in which Vin Diesel plays a stockbroker. Just saying.]

Once that sale is done, Sycamore plans to start liquidation procedures. The Marlin sale and the liquidation are subject to stockholder approval.

Not included in the Marlin sale is IQstream, a traffic optimizer that targets mobile networks. Sycamore is trimming staff associated with IQstream but still hasn't determined if the business will be sold or liquidated.

Sycamore also announced a cash distribution of $2 per share, supplementing the $10 per share announced in September.

Sycamore shares were down 27 cents (4.5%) at $5.71 in early after-hours trading.

Why this matters
"What's to save Sycamore?" Light Reading asked that question as far back as 2002, when it was clear the former high-flier was getting battered by optical networking's post-bubble crash.

At the time, Sycamore had $1 billion in cash. Could it be put to use to revive the company? we wondered.

Apparently not. Although Sycamore has perked up in the last year or so with its software focus, the company never fully revived, subsisting on its installed base for optical cross-connects. In 1999, the days of irrational exuberance, Sycamore had a market capitalization of more than $14 billion without having turned a profit. Its market cap today is $173 million.

As for why all this matters: Light Reading was founded to cover the brave new world of optical networking, with Sycamore high on the list of subjects. Sycamore managed to stick around a lot longer than most, but it never really recovered after the bubble burst.

For more



— Craig Matsumoto, Managing Editor, Light Reading

(6)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 5:18:43 PM
re: Sycamore Prepares to Shut Down


Craig,


 


They should have spent it or given it back a LONG time ago.  I would say the employees (especially management) have done very well at the expense of shareholders.


seven


 

Pete Baldwin
50%
50%
Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:18:43 PM
re: Sycamore Prepares to Shut Down


Should they have made this move years ago?

gtchavan
50%
50%
gtchavan,
User Rank: Light Beer
12/5/2012 | 5:18:43 PM
re: Sycamore Prepares to Shut Down


Very smart move.  At least they have some cash to distribute to the share holders.  With SDN it can only get worse.

gtchavan
50%
50%
gtchavan,
User Rank: Light Beer
12/5/2012 | 5:18:42 PM
re: Sycamore Prepares to Shut Down


Telco's better start writing a claim to assets in their contracts if the supplier folds and fails to cover the warrantee and future software upgrade from now on, because more of their suppliers are going to bite the dust especially when SDN kicks in.

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 5:18:41 PM
re: Sycamore Prepares to Shut Down


chuckj,


You might be right in general, but Sycamore is a specific case of wasting money and time.


- Went public in the Optical bubble and got a boat load of cash


- Bubble popped, CLECs died and few people bought Sycamore products


- None of the money was spent to make it a real business - nothing was bought, little was designed, it just sat there for almost 10 years


- Now they have distributed a bunch of the money and will end out handing out the rest after getting almost nothing for the actual business.


The actual telecom equipment companies are trying to make new things - whether that is a good idea or not.  Time will tell on that.  I think SDN is going to take a lot longer and have a much smaller impact than you do, but again that is a different debate.


Sycamore is a model of criminal corporate governance.


seven


 

BigBro
50%
50%
BigBro,
User Rank: Lightning
12/5/2012 | 5:18:24 PM
re: Sycamore Prepares to Shut Down


Am I reading this right: the stock is trading at $5.71, and they've got about twice that in cash, and zero debt, on the books, and not really burning a lot?


Isn't this a no-brainer "buy the stock to get your cut of the cash"? What am I missing?

Featured Video
From The Founder
Light Reading founder Steve Saunders grills Cisco's Roland Acra on how he's bringing automation to life inside the data center.
Flash Poll
Upcoming Live Events
February 26-28, 2018, Santa Clara Convention Center, CA
March 20-22, 2018, Denver Marriott Tech Center
April 4, 2018, The Westin Dallas Downtown, Dallas
May 14-17, 2018, Austin Convention Center
All Upcoming Live Events
Infographics
SmartNICs aren't just about achieving scale. They also have a major impact in reducing CAPEX and OPEX requirements.
Hot Topics
Project AirGig Goes Down to Georgia
Dan Jones, Mobile Editor, 12/13/2017
Here's Pai in Your Eye
Alan Breznick, Cable/Video Practice Leader, Light Reading, 12/11/2017
Verizon's New Fios TV Is No More
Mari Silbey, Senior Editor, Cable/Video, 12/12/2017
Ericsson & Samsung to Supply Verizon With Fixed 5G Gear
Dan Jones, Mobile Editor, 12/11/2017
Juniper Turns Contrail Into a Platform for Multicloud
Craig Matsumoto, Editor-in-Chief, Light Reading, 12/12/2017
Animals with Phones
Don't Fall Asleep on the Job! Click Here
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed