Cable Tech

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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the light 12/4/2012 | 9:59:27 PM
re: Calix: Shaping Up to Ship Out? Amazing how your article went up right after the final announcement was made to the employees today. Did Mike spoon-feed this information to you so that he could control the way Calix looks even in a negative situation?

ItGăÍs been 3 years and Calix is still in the Gă infamousGăÍ stealth mode G㢠anyone else see a problem with this? Yes you are right that Calix has shipped some 200 systems, but did Mike tell you that most all have been returned because they didnGăÍt work?

I would bet that Carl Russo is going to swoop in and take over just like he did at Cerent? HowGăÍs that going to make you feel this time Mike?
rbkoontz 12/4/2012 | 9:59:27 PM
re: Calix: Shaping Up to Ship Out?
Looks like the little Calix cult is crumbling. I say because the employees there used act more like cult members than employees - an arrogant attitude permiates Petaluma.

After grandiose promises of riches for all and asking his members to commit their lives to changing the world, it all comes to crashing halt this week. The CEO actually led his cult members to beleive their dream was still intact until this week. What world has he been living in for the past 12-18 months?

This appears to be a contagious behavior we refer to as the "Mahi-effect": driving a company into the ground due to EGO alone.

Not only are good employees being let go, but I am certain many key staff remaining will see through the mirage and stop killing themselves over what will likely now amount to very little.

lrdr 12/4/2012 | 9:59:26 PM
re: Calix: Shaping Up to Ship Out? Yes, I heard that they failed trials at a number of the labs and many of the boxes are back.
There are also HUGE expenses for the company in the EAP, for all the employees who thought they were going to get rich and subjugated the rest of their lives to work, and are now climbing out.
DCITDave 12/4/2012 | 9:59:26 PM
re: Calix: Shaping Up to Ship Out? I'm still working to report some other details about the company's deployments, customers, product, etc.

If you have a tip, please send e-mail to [email protected]

Pearl 12/4/2012 | 9:59:25 PM
re: Calix: Shaping Up to Ship Out? What bs... I have never in my 15+ years in telecom known of any supplier who purposely avoids naming customers if they really have any, especially a start-up company. Where is Lightreading's penetrating reporting to uncover at least 2 of the supposed 20 customers. This says that maybe they've done 20 trials, maybe have some conditional POs, but no revenue has actually been recorded. Come on Lightreading, get with it and dig deeper than what the execs are feeding you!
SeedsToWeeds 12/4/2012 | 9:59:24 PM
re: Calix: Shaping Up to Ship Out? Ever read the classic Moby Dick? Here is how it began with the Captain Ahab kool-aid drinking CEO's:


The details never change. Even if you have 20 customers who have seen your never-fully-functional product, it all started like this. Believe me, with 10 years of experience in the industry and from an insider's perspective. Going for the whale has no return at this point.
Dr. Smallberries 12/4/2012 | 9:59:23 PM
re: Calix: Shaping Up to Ship Out?
Lightreading, like all press, are easily manipulated. You should only believe 0.01 percent of what you read, as the entire world is pre-spun for your convenience. This is inescapable. It's also how Hitler got elected.

What you should all be talking about is: Why are we set to invade Iraq? What are we? The Nazis? Next stop: Poland.

Dr. J.
Dr. Smallberries 12/4/2012 | 9:59:23 PM
re: Calix: Shaping Up to Ship Out?
I stop believing anything anyone says after they start any sentence with "Believe me...."

Dr. J
ruraltelcoguy 12/4/2012 | 9:59:22 PM
re: Calix: Shaping Up to Ship Out? Its funny how quick other people, obviously vendors, are so quick to try and kick someone..fear is an amazing thing. You have stayed afloat and kept competition at bay for years with your FUD...but its not stopping these guys is it?!

Can you guys not read....they just raised another $50M...in the last TWO months...sound like a death spiral to you?

And, if you can read, Carl is ALREADY the chairman of the board.

I know several people there...morale, while sad, is extremely high...people know this is a necessary step...and btw, they were the only company that hadn't done this so far. And no-one except a rare few non-perfomers, have 'climbed' out.

See the forest through the tree - why do you think they are in stealth mode still...? Because it keeps you yahoos clueless what they are doing, while they steal almost 30 accounts so far accounts from you.

For the record - Calix rarely if at all does trials. All deployments are tested and put into production networks...and guess what, no returned boxes...unlike some of you yahoos I have seen the last year.
SeedsToWeeds 12/4/2012 | 9:59:22 PM
re: Calix: Shaping Up to Ship Out? Dr. Small:
Good Point about the Beleive me statement. It is a mistake CEO's and world leaders make also. Kind of like when Bill Clinton pisses on your back and tells you it is raining. Which is the same as the B.S. the executives at Calix do to the reporters. However, the facts remain. An insider doesn't tell these things to make those think it is raining when pissing on the backs of others. An insider calls out experience and facts as they were experienced-- kind of like a historian (and not a lying politician).
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