Light Reading

Sycamore Prepares to Shut Down

Craig Matsumoto
News Analysis
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 Beer
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 Beer
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: Moderator
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?

Flash Poll
From The Founder
Network architects aiming to upgrade their networks to support agile, open, virtualized services in the 21st century need to consider new criteria when choosing between technology suppliers.
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
Wagner’s Ring
Business Value Trumps Moving Bits for Virtual Networks

7|7|15   |   01:22   |   (0) comments


At the recent Open Networking Summit, carriers described how they're focused on increasing revenue rather than just improving technology. This requires cultural changes, which can be more difficult than technology changes.
LRTV Custom TV
VeEX: Live from the Big Telecom Event 2015

7|7|15   |   2:28   |   (0) comments


VeEX's Carl Goldschmidt provides new product updates, including the RXT modular test platform and TX300s. With the latest technology in pluggable physical interfaces, the RXT platform combines multiple technologies with testing range from 10 Mbit/s to 100 Gbit/s. The TX300s is an "All-in-one" advanced multi-service test platform from 64 Kbit/s to 100 Gbit/s that ...
LRTV Custom TV
Light Reading Interviews MRV: 2015 Big Telecom Event

7|7|15   |   3:45   |   (0) comments


Scott St. John, SVP of Global Sales & Service, discusses MRV's customer-centric culture, the new OptiPacket OP-X1 100G access platform, and recent customer wins with Light Reading at BTE 2015.
LRTV Custom TV
Procera: Enhancing the Subscriber Experience

7|7|15   |   4:53   |   (0) comments


Hear from Procera on the latest in Subscriber Experience solutions. Learn how Procera's RAN Perspective technology helps network operators monitor and manage network traffic, in real-time, solving congestion and other network issues.
Between the CEOs
HP's Prodip Sen: The NFV Journey

7|7|15   |   21:39   |   (0) comments


Prodip Sen, CTO of the Network Functions Virtualization (NFV) business unit at HP, talks to Light Reading founder and CEO Steve Saunders about the four stages of the NFV journey.
LRTV Documentaries
Leading Lights 2015 Winners' Video

7|7|15   |   08:34   |   (2) comments


Hear what the Leading Lights 2015 winners had to say after they picked up their awards in Chicago.
LRTV Documentaries
PSA: The Perils of a Hyper-Connected Society

7|6|15   |   1:38   |   (0) comments


A public service announcement calling attention to the perils of a hyper-connected society.
LRTV Interviews
Guavus Takes Analytics on the Road

7|6|15   |   4:09   |   (3) comments


Guavus CEO Anukool Lakhina tells Light Reading CEO and founder Steve Saunders how the analytics tools developed for telcos are applicable to the transportation industry.
Telecom Innovators Video Showcase
Mellanox's New 25/50/100Gb/s Ethernet Products

7|6|15   |   2:44   |   (0) comments


Mellanox offers a complete 10/25/40/50/56/100Gbit/s solution that delivers industry-leading performance, scalability, reliability and efficiency for optimal application performance and data center ROI.
Telecom Innovators Video Showcase
Arista's CloudVision

7|6|15   |   6:01   |   (0) comments


Anshul Sadana answers questions from Steve Saunders, Light Reading’s founder and CEO, about Arista’s CloudVision, a global cloud network controller for workload orchestration and workflow automation delivering a turnkey solution for cloud networking.
LRTV Custom TV
Red Hat Demo

7|2|15   |   10:53   |   (0) comments


Red Hat's Nicolas Lemieux demonstrates how Red Hat is driving innovation through open source communities.
LRTV Custom TV
Red Hat's Approach to OpenStack Adoption

7|2|15   |   5:17   |   (0) comments


Red Hat's Radhesh Balakrishnan outlines his company's open source strategy for both enterprises and telcos.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, The Westin Peachtree Plaza, Atlanta, GA
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
All Upcoming Live Events
Infographics
Equinix walks through the past four digital economy eras from computing to network to connected to today's interconneted world.
Hot Topics
What's a Gigabit Good For?
Carol Wilson, Editor-at-large, 7/1/2015
IBM Sows Seed for New Telco Unit, Plans NFV/SDN Push
Ray Le Maistre, Editor-in-chief, 7/6/2015
FCC Chairman Talks Up SDN/NFV
Mari Silbey, Senior Editor, Cable/Video, 7/2/2015
A&E Launches Lifetime OTT Service
Alan Breznick, Cable/Video Practice Leader, 7/3/2015
What the Helio? MVNO Is Back After First Flop
Sarah Thomas, Editorial Operations Director, 7/6/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Prodip Sen, CTO of the Network Functions Virtualization (NFV) business unit at HP, talks to Light Reading founder and CEO Steve Saunders about the four stages of the NFV journey.
Casa Systems has been going from strength to strength over the last couple of years. In 2013, it became the first vendor to ship an integrated CCAP device -- the ...
Cats with Phones