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
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.
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Custom TV
End-User or Enterprise Benefits to the New IP

7|30|15   |   04:27   |   (1) comment


Andrew Coward discusses what the New IP means to end users or enterprise customers. He explains compelling reasons, including how every customer can get their own network, from the transformation to the New IP.
LRTV Custom TV
Network Visibility & the New IP

7|30|15   |   02:23   |   (0) comments


Mukund Srigopal provides an explanation of what network visibility is and how it is essential as service providers transition to the New IP. In addition, the importance of the network packet broker is discussed.
Between the CEOs
Video Exclusive With Basil Alwan, Alcatel-Lucent

7|24|15   |   26:44   |   (5) comments


Basil Alwan, President of IP Routing & Transport at Alcatel-Lucent, discusses virtualization, cultural challenges, the capex crunch and more with Light Reading founder and CEO Steve Saunders.
LRTV Custom TV
VDF: Enable the Financial With Mobile Money

7|20|15   |   06:53   |   (0) comments


Ian Ravenscroft discusses how operators can expand to occupy the entire digital services value chain through service innovation.
LRTV Custom TV
Telefónica on OSS Transformation

7|20|15   |   06:01   |   (0) comments


Jose Gonzales discusses the details of Telefónica's operation transformation program.
LRTV Custom TV
Judi Achmadi on Huawei's Cloud Storage Solution

7|20|15   |   03:33   |   (0) comments


Judi discusses the key business goals of TelekomSigma's public cloud service and how Huawei's solution helps them address challenges.
LRTV Custom TV
KPN Enlightening Digital Business & IT Transformation

7|20|15   |   06:19   |   (0) comments


Rob de Beer discusses the changes that operators need to make with service innovation now coming from the Internet world.
LRTV Custom TV
Stratus Telco-Grade Cloud Solutions & NFV

7|20|15   |   07:34   |   (0) comments


Ali Kafel from Stratus Technologies addresses high-availability concerns within the telco industry with a solution that enables telcos to provide high-availability and stateful fault-tolerance using a software-based approach.
LRTV Documentaries
The Six Million Dollar Business Man

7|20|15   |   01:52   |   (0) comments


Steve Saunders, publisher. A man barely alive after an acquisition malfunction imploded the company he founded. Gentlemen, we can rebuild Light Reading. Better, faster, stronger.
Between the CEOs
CEO Chat With Anukool Lakhina, Guavus

7|20|15   |   38:51   |   (1) comment


Guavus CEO Anukool Lakhina talks to Light Reading founder and CEO Steve Saunders about the role of operational analytics in the communications services and networking sectors, particularly in relation to IoT.
LRTV Custom TV
IBM's Flash Storage With Intel QuickAssist

7|20|15   |   03:18   |   (0) comments


Intel's Bev Crair and IBM's Eric Herzog discuss how IBM's V9000 Flash Storage System has helped customers around the world. Featuring real-time compression powered by Intel QuickAssist Technology, the V9000 is a next-gen flash storage solution.
LRTV Huawei Video Resource Center
Thailand's AIS: Transforming to an FMC Operator

7|17|15   |   4:53   |   (0) comments


Saran Phaloprakarn, Senior VP of Fixed Broadband Business Management of Thailand's AIS, was a keynote speaker at the first Asia-Pacific Ultra Broadband Summit in Bangkok. In this video, he talks to Heavy Reading about transforming into an FMC (FBB+MBB+Content) operator.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 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 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Infographics
Network operators start seeing savings from NFV in the first year, according to a study by Affirmed Networks and ACG.
Hot Topics
Robbins Succeeds Chambers as Cisco Changes CEOs
Mitch Wagner, West Coast Bureau Chief, Light Reading, 7/27/2015
Cable Feuds With Senate Dems Over STBs
Alan Breznick, Cable/Video Practice Leader, 7/31/2015
RJio to Launch Its Own 4G Devices Brand
Gagandeep Kaur, Contributing Editor, 7/27/2015
Easing the Tech Pains for the Homeless
Carol Wilson, Editor-at-large, 7/28/2015
Like Us on Facebook
Twitter Feed
September 22, 2015
Media Begins With “Me”
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Basil Alwan, President of IP Routing & Transport at Alcatel-Lucent, discusses virtualization, cultural challenges, the capex crunch and more with Light Reading founder and CEO Steve Saunders.
Guavus CEO Anukool Lakhina talks to Light Reading founder and CEO Steve Saunders about the role of operational analytics in the communications services and networking sectors, particularly in relation to IoT.
Cats with Phones
Comes With Free Phone Stand Click Here
Who says cats don't have any skills?