Cable Tech

Zhone Rezhones (Again)

Zhone Technologies Inc. confirmed on Monday that it has cut about 120 jobs, in an effort to keep its expenses down.

The access equipment startup, which began in 1999 with $500 million in venture capital and leveraged buyout money, says it still hopes to become a public company when the markets allow. Zhone withdrew its registration for an IPO early last year.

"After all of our acquisitions we've had a few redundant positions. We've reduced some expenses in the past – like cutting down on the number of offices we have," says company spokesman Tim Donovan (see Zhone Rezones ). "This round [of layoffs] was done to make our operation lean and to keep us from having to go out and seek another round of funding."

Donovan says the company is close to winning some key carrier contracts in the next few months and has realigned itself internally to improve its chances.

Zhone's product portfolio includes several products for the access portion of telecom networks. Its flagship product, the Broadband Access Node, combines a DSLAM, a switch/router, and a broadband subscriber management system in a single box. In August 2001, it bought Nortel Networks Corp.'s (NYSE/Toronto: NT) AccessNode and Universal Edge 9000 product lines for an undisclosed sum (see Zhone Acquires Nortel's Access Gear).

Donovan says this recent round of layoffs was concentrated on slower-growing areas of Zhone's business, such as its integrated access device and wireless point-to-point products in Oakland, California. Also affected were some former Nortel employees in Atlanta, who had just joined Zhone about six months ago.

Zhone had only eight employees in September 1999. By September 2000, it had about 490, which grew to around 615 employees by April 2001. If this number stayed the same through the rest of 2001, the recent layoffs would represent a 20% cut, reducing Zhone's headcount to fewer than 500 people. Zhone officials would not say what the current headcount is.

Zhone has acquired all or parts of six companies since it was founded by Mory Ejabat and Jeanette Symons. The company was ramping for an IPO in late 2000 but withdrew that filing in May 2001 (see Zhone Zhaps IPO ).

Zhone has made no formal indication of when it intends to take another shot at the public markets. Donovan says this summer might be a good time, as it will coincide with some new product announcements and, he hopes, new customer wins as well.

— Phil Harvey, Senior Editor, Light Reading
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LightWizard 12/4/2012 | 10:48:56 PM
re: Zhone Rezhones (Again) Headcount is 240, now.

From a high of...615?

Right, it's much more attractive and solid. How could it get more financing after getting half a billion?
ITpaysthebills 12/4/2012 | 10:48:53 PM
re: Zhone Rezhones (Again) The Nortel folks were based in Alpharetta, GA. Because of the number of people laid off (37) they had to WARN the state. Here is the official number on GAs Dept. of Labor site:


There were 74 people moved from Nortel to Zhone. 37 is a 50% cut. (It is actually more since people left and were never backfilled.)

Why would you lay off that many people supporting the product that is paying to keep the lights on? How long will the customer base put up with poor support before they go to another vendor? Why should customer buy new product from Zhone when they can't get support for the ones that they already bought?

I certainly hope that the people that are still employed are planning for the future.
dietaryfiber 12/4/2012 | 10:48:52 PM
re: Zhone Rezhones (Again) It will be interesting to see if they can get a valuation as high as $500M. It would seem to be quite unlikely.

dietary fiber
lrdr 12/4/2012 | 10:48:52 PM
re: Zhone Rezhones (Again) I think they are positioning themselves for either an acqusition or a washout round.
skeptic 12/4/2012 | 10:48:51 PM
re: Zhone Rezhones (Again) I think they are positioning themselves for either an acqusition or a washout round.

I dont know who would buy them. They really
don't have anything that anyone would want.

As far as raising money, if they have already
gone through half a billion dollars, who is
going to bring enough new money to the table,
even in a washout, to keep a company going
that can burn through money like that.

ritefiber 12/4/2012 | 10:48:51 PM
re: Zhone Rezhones (Again)
Call a 120 positions are "a few redundant positions"... sounds like a signifcant % of the company, especially if the former messages are true.
lrdr 12/4/2012 | 10:48:50 PM
re: Zhone Rezhones (Again) well, maybe someone wants the nortel product and might get it cheaper than when nortel was selling it. (just kidding!)

true enough that there doesn't seem much of use there. how is the stuff working? Does anyone know?
Cheesy Guy 12/4/2012 | 10:48:49 PM
re: Zhone Rezhones (Again) Have you noticed that the company always makes
some pleasant statement when they are laying
off people?
Whats the point?

I'd like to see some company give a more
frank statement, like "we are laying a lot
of people off because no one is buying our
pinkyenthebrain 12/4/2012 | 10:48:48 PM
re: Zhone Rezhones (Again) Oh yes - frank indeed. Thank god for all the truly honest people of the world.

The_Holy_Grail 12/4/2012 | 10:48:47 PM
re: Zhone Rezhones (Again) Is this the same company that was busy passing out job flyers in company parking lots about 18 months ago in the east bay?
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