Hyperchip Has a Hiccup

Canadian core router startup cuts its staff in half while its CEO heads for the door

June 8, 2004

2 Min Read
Hyperchip Has a Hiccup

Hyperchip Inc., one of the startup survivors in the core routing space, took some lumps last month as it cut its staff in half and waved goodbye to its CEO, Brian Barry. Barry was hired by the startup back in April 2001 (see Hyperchip Hires Ericsson's Barry as CEO).

The company hasn't replaced its CEO yet, but Dominic DeVeaux, a senior partner of the DeVeaux Brault & Associated management consultancy, has been installed as the company's new president, sources close to the company say.

About half the staff was cut, leaving about 65 employees, according to one source close to Hyperchip.

With its product completed through two releases, the company may have felt it was time to pare its development staff and concentrate on sales, while stretching its cash. The company has raised about $140 million in venture financing to date, according to its Website. Its last big funding round came in January 2002 (see Hyperchip Lands $43M in Financing).

Sources say the company has a lot going for it, technically. It has one router running live traffic in a customer network, and its second product release is in early trials with carriers. But the lack of investment in the sector is putting the pressure on the startup to bag a contract or head for the exits.

In the short term, the hype around Cisco Systems Inc.'s (Nasdaq: CSCO) CRS-1 actually benefits companies in Hyperchip's shoes. Some carriers were said to be holding back core-routing RFPs and buying decisions until they saw what Cisco would release. In the long run, though, more direct competition from Cisco doesn't bode well for a startup, unless it has a marquee customer, a big partner, and some iron-stomached investors.

It's not that no one's funding core router projects. Axiowave Networks Inc., for instance, has raised more than $120 million to date, with its most recent round closing last year (see Axiowave Queues in the Core).

But startup life ain't easy. So far, Hyperchip has outlasted Allegro Networks, Charlotte's Web Networks, IronBridge Networks, and Pluris, and cherry-picked the remains of IPOptical. But it still faces competition from Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7), Chiaro Networks Inc., Procket Networks Inc., Juniper Networks Inc. (Nasdaq: JNPR), and Cisco, to name a few.

It isn't the only core routing player to lose its head recently. Caspian Networks Inc. founder Larry Roberts recently stepped away from his day-to-day responsibilities to start up another company (see Larry Has Left the Building).

Calls to Hyperchip had not been returned by press time.

Hyperchip is slated to occupy Booth 22924 in the South Hall (Hall A), at Supercomm.

— Phil Harvey, News Editor, Light Reading

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like