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Zhone RezonesZhone Rezones

Zhone is relocating staff in two offices and cutting some jobs in Texas

April 27, 2001

3 Min Read
Zhone Rezones

Zhone Technologies Inc. is closing down two of its U.S. offices in a move to cut costs and to bring product groups closer together, Light Reading has learned.

The two offices affected are Zhone’s Richardson, Texas, and Minneapolis facilities. Zhone established itself in Texas when it bought softswitch maker Xybridge in December 2000 and in Minnesota when it bought Roundview Inc., an IP and networking software group (see Zhone Adds Xybridge to Its Cart).

Zhone, which makes a wide variety of local access equipment for service providers, first denied that there were any layoffs occurring in the two offices, stressing that the reason behind Zhone’s moves was to get certain product groups closer together. Zhone spokesman Tim Donovan told Light Reading on Thursday that Zhone does not “acquire companies and then get rid of their people. That just doesn't make sense.”

People with knowledge of Zhone’s reorganization confirm that Zhone’s goal in closing its Minneapolis office was to bring its IP engineers to its corporate headquarters in Oakland, Calif., the town about which Gertrude Stein famously remarked: "There's no there there."

“They were told: ‘You still have a job, but it’s in Oakland,’” says one source.

In all, about 25 people are affected in Minneapolis, and it’s likely that only a few will decide to make the trek to the Bay Area. “I think very few here will take them up on the offer,” says one source. “People just don’t like to leave Minnesota.” (Go figure.)

The narrative involving the Richardson office is a bit different. Light Reading sources in Texas and in Oakland say that half the workers in Richardson were given an opportunity to relocate to Boston, and the rest – about 40 people – were let go.

Those sources add that the one reason Zhone would combine its softswitch unit with its network management unit in Boston is because both teams do extensive work using the Java programming language and it makes sense to keep all of that expertise in the same building.

The group in Richardson was given until May 15 to close the office, and they’ll be considered “on leave of absence” until June 15, after which their severance package goes into affect, Light Reading sources say.

When contacted by Light Reading on Friday, Zhone hedged a bit from its earlier comments about staff reduction. “We would like to think that headcount would remain untouched as we consolidate these offices,” says Donovan. “But is that realistic? Probably not.

“With any sort of consolidation there may be some redundancy of positions, but that tends to be minimal," he adds. “In the Xybridge marketing group there are probably some redundant positions, and we're probably talking about three or four people there. Don't get me wrong: There probably will be a few people that will go, but nothing of magnitude and nothing that would put us in defense-mode."

Xybridge was established in February 1999 when Telesoft Inc., a telecom systems integrator founded by Jawad Ayaz, formed the company as its product subsidiary. Zhone purchased Xybridge in December 2000 for an undisclosed sum. Ayaz, who could not be reached for comment, is said to be starting another company in India now.

Zhone filed for a $345 million initial public offering in October 2000 and, despite the recent economic downturn, the company is still in registration (see Zhone Files for IPO).

Since September 1999, Zhone has grown at an incredible pace (see Zhone Details Product Strategy). In the past two years it has made at least five acquisitions, including: CAG Technologies, an electronics subsystems maker; Premisys Communications, whose Integrated Multiple Access Communications Server (IMACS) provides most of Zhone's revenues; and OptaPhone Systems Inc., maker of point-to-point wireless systems.

Zhone had only eight employees in September 1999 and swelled to about 490 one year later. Donovan says the firm now has about 615 employees.

– Phil Harvey, Senior Editor, Light Reading http://www.lightreading.com

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