Agility Is Alright, Too

Tunable laser startup Agility Communications Inc. strongly refutes rumors that it's in trouble.

The company is struggling, alright. But it's struggling to keep up with unexpected demand -- not struggling with yield problems and a shortage of funds, according to Ron Nelson, Agility's president and CEO.

Nelson says the market for tunable lasers has roared into life this year, confirming recent remarks made by a rival startup in this space, Iolon Inc.. He gives the same reason - that vendors are routinely designing tunable lasers into DWDM gear, and carriers are buying this sort of kit (see Iolon's Alright ).

The upsurge in orders caught Agility by surprise, according to Nelson. "Our lead times are stretched out," he says. The company is addressing the problem by bringing its full automated production plant in Pennsylvania out of mothballs and hiring staff to run it.

Nelson acknowledges that Agility cut its workforce by about 10 percent a month or two ago, but says this was part of an efficiency improvement plan, not a general layoff to cut costs.

"Just in the last week we've got two large orders from Tier 1 systems houses," says Nelson. "We've got just a ton of lasers that have been deployed and are carrying live traffic... I think we've probably got 80 to 90 percent of the market right now."

Nelson says there's no truth in rumors that Agility is in financial trouble. "We do want to raise a little bit more funding, but we're in no panic, and we've got a lot of interest from investors," he says.

Nelson declines to say how much Agility is raising, but says the company's strong order book means that the round is likely to be oversubscribed by existing investors.

"We're the trendsetter in tunable lasers," says Nelson. Plenty of big components companies would be interested in buying Agility, he says, "but we're not up for sale."

— Peter Heywood, Founding Editor, Light Reading

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bw 12/5/2012 | 1:22:09 AM
re: Agility Is Alright, Too The transponder biz actually may be saving Agility, as it's higher margin product (at least positive), and all (almost all) tier 1 customers are buying transponders these days..

it's the story of Iolon + Optium, only margin doesn't have to be shared. Obviously the product has to be good to earn the biz. What i heard is that the Agility tunable transponders are kicking ass at a few tier 1 accounts.

o-man 12/5/2012 | 1:22:09 AM
re: Agility Is Alright, Too Is the margin a positive or negative??

I would wager money that $$ are being shipped with every laser or transponder sold.

BTW how is the old Cinta group doing that was trying to make the Agility transponder?
o-man 12/5/2012 | 1:22:08 AM
re: Agility Is Alright, Too Can anyone explane how a 6 section laser can be manufactured at a reasonable cost?

Also, the last I heard Agility was in trouble with delivering to French tier 1 OEM's?

The CEO from Agility said in the article that they were caught with their pants down...(paraphrase) But that translates to selling the parts too cheap and bringing down the limited industry ASP's...

Companies like Agility were always too aggressive in such a limited market!
Dr.Q 12/5/2012 | 1:22:08 AM
re: Agility Is Alright, Too Agility production volume up??? Maybe they put in total automation into their packaging facility while it lay fallow? NOT! They seriously considered selling the facility to C.E.M.'s, and had several major ones crawling inside and outside their facility to size up the potential for it to do other opto manufacturing besides the Agility devices. No one bit on the opportunity.
Their parking lot has remained pretty sparsely attended over the past several weeks -- no sign of increased assembly staff that they would have to add if their orders were real.
Conclusion: Ron Nelson is (still) bluffing.

- Q
SuperLightening 12/5/2012 | 1:22:08 AM
re: Agility Is Alright, Too Agility's tunable laser + transponder business model really make sense. The industry has not got enough volume for tunable laser only business. Maybe, couple of years later, but definitely not now.
bw 12/5/2012 | 1:22:08 AM
re: Agility Is Alright, Too Peter H:

You've done a few pieces about the fate of tunable laser vendors, mostly as sound board from the companies themselves..How about check with a few tier 1 system houses to check validity of their claims..

When the system houses really started to design new products with new compoents, that sounds like good news to the whole industry (at least they are looking forward with new investment, not just try to cut cost to survive..) Otherwise, we're still in deep xxxx.

it's worth of checking.
bw 12/5/2012 | 1:22:07 AM
re: Agility Is Alright, Too Actually, the yield of chips is really not a most important factor, as fix cost really dominate everything. The most important question is volume. Each chip wafer can yield 100s or 1000s of chips. Even with low yield (has to have some consistent yield, even it's low), you can get chip cost below $100 as long as you agressively rid of bad chips early in the process, hence incur little cost. The real killer is volume. The fix cost to run a growth and process fab can be a few millions a yr. If you have volume in 1000s, each chip cost $1000s, if you can get volume to 10,000, the cost can be below $100. You're perfect right that the lasers are sold for no profit or at a lost today, as the volume is not high enough to off-set the fix cost. The math also works for DFB lasers. The real question is if you can get to the high volume before you run out of money... Selling transponders in this case help to produce positive margin, as you can afford to absorp the relative high laser cost...At the end, more competitive vs. Iolon and Optium, with each has to make some maney, or one of them will disappear..
o-man 12/5/2012 | 1:22:07 AM
re: Agility Is Alright, Too Iolon may dissapear, but the rumors are that they are looking for sales help :)

Also Optium is never going to go away, rumors are they are $$ positive :) (good for them)

Please explane to me how Agility can weed out bad lasers early? Are the going to put a 45 degree miror to inspect the performance before cleaving and COC works begin.

The bottom line is I think Agility will always be very cost prohibitive and where is their transponder team, I have heard they are on the Street (1st street in SJC)!!

olfacutter 12/5/2012 | 1:22:06 AM
re: Agility Is Alright, Too there is a another transponder based on the thermal tunable laser by santur; the civcom xlight transponder. does anyone know how are they doing?
deauxfaux 12/5/2012 | 1:21:58 AM
re: Agility Is Alright, Too Ron is full of it. They've got some orders, but they've nearly burned through all of their cash.

At the end of the day, there isn't enough volume, the costs are too high and the price is too low for them to survive.

Say goodnight gracie
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