Even though it claims to have a shipping product, startup Calix is cutting jobs to conserve cash UPDATED 5:00 PM

August 8, 2002

3 Min Read
Calix: Shaping Up to Ship Out?

Access equipment maker Calix Networks remains one of the best kept secrets in the telecom business.

Calix executives say the company has shipped more than 200 of what are believed to be access boxes that provide both fiber and copper-line access to telecom central offices to some 25 carriers (see All About Calix). But that's as much as they're willing to divulge at this point.

The company's recent layoffs, however, were not kept secret. On a Tuesday evening call with Light Reading, Calix said it would begin laying off staff this week.

"We've been able to raise $208 million since the inception of the company," said Kevin Walsh, Calix's VP of marketing. "Despite that, as we look forward, we see that we need to become a lot less dependent on the capital markets."

The company's most recent infusion of cash came in the past 60 days, said Calix CEO Michael Hatfield.

Walsh said Calix hasn't yet finalized how many jobs will be affected by the layoffs. He says only that the cuts will be company-wide and some senior level managers will be let go. Fourteen months ago Calix's headcount was as high as 275, according to a report in The Press Democrat of Santa Rosa, Calif.

One Calix employee who was let go Thursday morning says there were 122 people fired – 112 at the company's Petaluma, Calif., headquarters and about 10 from its Boston location.

Hatfield said he's anxious to share details about Calix's business and its product but won't do so until the fourth quarter of this year.

The product is believed to connect phone company central offices to remote terminals and customer buildings. The access box would aggregate and transport several kinds of fiber-based data services across a Sonet network, while also handling legacy phone services that use copper wires, say industry sources familiar with Calix's plans.

"Its supposed to be able to handle everything from POTS [plain old telephone service] to OC192 [10 Gbit/s] data all within a four-rack-unit chassis," says one former Calix employee.

A rack unit is about 1.75 inches, so in an average telecom equipment rack a 4RU box would be roughly 7 inches high and 19 inches wide.

"It's a 'wish box,' " a former employee says. "Any service a carrier wishes it could add, Calix will try to fit it into their product."

"We can tell you that we have in excess of 25 customers today, and these are customers that have placed purchase orders for production network deployments," Walsh said on Tuesday. "We have roughly 200 systems that have been shipped into these networks, and a significant number of these customers are running live traffic" over the Calix products.

Calix won't name its customers, nor will it specify how many digital subscriber lines (DSLs) or Sonet lines it currently has in service across its customer base. However, with the help of two Calix competitors and a few former employees, Light Reading was able to verify that the startup has shipped products to Alltel Corp. (NYSE: AT) and Rural Telephone. Neither company returned calls from Light Reading.

Several of Calix's other customers are believed to be independent telephone companies – the phone companies in mostly rural areas that cover about half the geographic area in the U.S. but only about 15 percent of the country's telephones.

The company still won't officially reveal its investors or board members. Light Reading has previously reported that Calix's investors include Azure Capital Partners, Flextronics International (Nasdaq: FLEX), Integral Capital Partners, Meritech Capital Partners, Michael Dell's MSD Capital Partners, Pivotal Asset Management, and Redpoint Ventures.

Hatfield; former Cisco Systems Inc. (Nasdaq: CSCO) executive Carl Russo; Ajaib Bhadare, one of Cerent Corp.'s founders; and Paul Ferris, a partner at Azure Capital Management, sit on the company's board of directors, as noted in earlier Light Reading reports.

— Phil Harvey, Senior Editor, Light Reading

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