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Tellium announced a 37% job cut Monday; its stock is trading below $1; and the CEO is nowhere to be found
June 26, 2002
Tellium Inc. (Nasdaq: TELM) announced its anticipated job cuts on Monday after the market closed (see Tellium Wields the Axe). But the big question to arise at Tellium headquarters, apparently, was: Where's the CEO?
William Proetta, president and COO of the company, who has taken over the day-to-day leadership of the company, was the one to deliver the bad news to the 200 staffers that were laid off.
For about a month now, Tellium CEO Harry Carr has rarely been seen at the office, say sources on the scene. In fact, one source says that he has only seen Carr at Tellium headquarters once since May. Back in May, Carr told the staff during the company’s weekly meeting that he had some personal affairs to take care of and that he would be out of the office for a couple of weeks. But sources close to the company say they believe Carr’s personal issues were resolved weeks ago.
Tellium officials, including Carr himself, have not returned Light Reading phone calls regarding this story.
His absence has left some wondering if the board has asked him to step down. Others speculate that he is on the road trying to sell the company. And still others believe that he is still working on those personal matters.
Regardless of why he has been missing, one thing is clear, Tellium has been struggling (see Cuts for Tellium?). The latest Wall Street scuttlebutt is that it will fall short of the $30 million in revenue Wall Street analysts have predicted. In Monday's press release, which announced the restructuring plan, the company said it would provide more guidance on its financial condition later this week.
Carr has been described by former employees and analysts covering the company as a very involved CEO and chairman. His absence disappointed former Tellium workers.“He always said that Tellium was like a family,” says one former employee. “But he didn’t even face us to say goodbye. He couldn’t even come to look people in the eye.”
The cuts at Tellium were made across the entire company and affected everyone from marketing to engineering to operations. One group that was eliminated almost entirely was the MEMS (micro-electro-mechanical system) group, signaling that the company has likely canceled its full-spectrum all-optical switch. Jim Walker, director of the MEMS program, Evan Goldstein, and Lih Lin, were all seen leaving the building yesterday, boxes in hand. Another member of the MEMS team, Karen Bergman, had already left the company to teach at Columbia University in New York City, says one source.
For the most part, departing employees were pleased with their severance package, which includes two month’s salary and health benefits until the end of the year. The company also extended the amount of time ex-employees have to exercise their options from 90 days to a full year.
For those employees left behind, the company is also instituting a stock swap plan, which will allow employees still working at Tellium to turn in their old options and get them repriced at a lower strike price.
Tellium’s stock closed down $0.22 (20.18%) to $0.87 yesterday.
— Marguerite Reardon, Senior Editor, Light Reading
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