Calient Cuts 60 Jobs

In spite of raising a monster $225 million round of finance last December, Calient Networks Inc. yesterday told 60 of its 269 staff that they'd become redundant, in order to cut costs.

The startup expects the job cuts to give it another four to six months’ grace to get its all-optical switch through carrier trials and get some orders rolling in before it needs to raise further funds.

“Rather than run up to the edge and fall off, we decided to do the prudent thing and make economies now," says Charles Corbalis, Calient’s CEO.

Corbalis concedes that it has taken Calient longer than expected to develop its optical switch because of unforeseen "challenges." Its switch, which can scale to handle more than 1,000 wavelengths, is a particularly compact arrangement of tiny tilting mirrors based on MEMS (micro-electro-mechanical system) technology (see Calient Claims Breakthroughs On Optical Switches). Calient says that “four or five” potential customers and distributors are waiting in the wings to test its switch. But it realizes that this evaluation process is likely to be long–winded. “We’re probably talking nine to twelve months,” says Corbalis.

Amazingly, the $225 million Calient raised six months ago doesn’t represent a big enough “cash buffer” to help Calient over this period, when no revenues will be coming in, according to Corbalis (see Calient Secures $225M 3rd Round).

Developing photonic switches and supporting multiple carrier lab and field trials is incredibly expensive, he says. Part of the reason is that Calient is developing a particularly advanced optical switch, which translates into particularly expensive components (especially when bought in low volumes) and particularly expensive test equipment.

The carrier trials also rack up huge bills. They require teams of highly paid technicians to spend months working off site, clocking up big expense accounts. Each trial can end up costing millions of dollars, according to Scott Clavenna, president of PointEast Research and director of research at Light Reading.

The big question is whether these trials will translate into orders. “Calient has an impressive optical switch, so lots of carriers want to test it,” says Clavenna. “Whether that translates into sales remains to be seen. The core is a very difficult market to crack, particularly with purely photonic solutions."

One of the reasons for this uncertainty is that moving to all-optical switches is a big leap into the unknown -- not something that carriers will undertake lightly (see MEMS Madness).

Another reason is that some carriers have concluded that monster all-optical switches like Calient’s may not be necessary; distributed architecture networks may enable them to get away with lots of smaller switches rather than a few big ones.

On top of that, some vendors argue that carriers have already beefed up their core backbones too much and that there’s no need to boost capacity even further with optical switches at present.

Not surprisingly, Corbalis rejects these comments. “The number of customers beating on our doors --that’s what’s driving us,” he says. Calient's switch will cut service providers' operating costs, he contends, and that's a priority for all carriers.

Calient’s switch also has applications in metro networks, Corbalis notes, citing a joint demonstration of this with Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) at the recent Supercomm trade show.

— Peter Heywood, Founding Editor, Light Reading
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ng_mui 12/4/2012 | 8:13:08 PM
re: Calient Cuts 60 Jobs It's always funny when they first announce the product - for Calient it was Supercomm 2000
("scalable from 256x256 to 1000x1000 ports in
a single 7 foot rack with future expansion to
4096x4096 ports"). Now it "can scale to handle
more than 1000 wavelengths"! Is it really only
a 32x32 switch?

Calient's business model seems to be all over the
place - did they really need to acquire a MEMS
manufacturer - Kionix? For such a small company
they should be looking to outsource the components
and not spread themselves so thinly - how many
architects in Calient are/were working on
defining G-MPLS and related protocols, and not
directly contributing to the bottom line?
Why don't they let the established companies finance the IETF/OIF standards development as
part of their R&D budgets and just implement them
when everything's completed?

Having said all that, they look quite promising!
Peter Heywood 12/4/2012 | 8:13:07 PM
re: Calient Cuts 60 Jobs Hi ng_mui...I used the terminology about being able to handle more than 1,000 wavelengths deliberately, because I've learned the hard way (getting roasted on these boards) that using ports to specify the size of all-optical switches is misleading.

On your other point, Calient itself told me that the days of lean and mean startups had returned.
netsmart 12/4/2012 | 8:13:05 PM
re: Calient Cuts 60 Jobs I agree with ni. Calient does not have 1000 X 1000 switch. They probably have 64 x 64.

Charles is known for quality engineering, but I am surprised that some of the team like System Engineering, Embedded Systems & Network Management
have proper directions and quality engineers.

calient need to prove to the outside world that, they have stuff.
sntwk 12/4/2012 | 8:13:01 PM
re: Calient Cuts 60 Jobs They should probably hookup with BrightLink!

Metro/grooming switches will have more growth before need for pure OXC ever materializes.
johnjohn 12/4/2012 | 8:13:01 PM
re: Calient Cuts 60 Jobs With the long sales cycle in this market, Calient will go down in flames.
manoflalambda 12/4/2012 | 8:13:00 PM
re: Calient Cuts 60 Jobs Hmmm. Wonder if they might take the 64x64 section that works and try to sell it as a single-shelf product. Similar to Agere or Polatis' modules...

sntwk 12/4/2012 | 8:12:58 PM
re: Calient Cuts 60 Jobs

Does agere systems (I suppose you are referring to LU spin-off) make systems or components? My understanding was that Agere supplies framers etc.

Also is Polatis or Polaris? you are talking about
dennisr 12/4/2012 | 8:12:58 PM
re: Calient Cuts 60 Jobs Cooked - you're too pessimistic.

squeazie 12/4/2012 | 8:12:57 PM
re: Calient Cuts 60 Jobs It appears with the morbid performance of the CLECs, IXCs, and telecom sector as a whole, that the fascination with all-optical core switching has fallen to the wayside (for the time being). The real focus currently is the access bottleneck and developing profitable services that customers will buy in a down cycle. the need to meet business plan projections, eps, etc. point to the access bottleneck and service velocity.

Q4U: Is anyone seriously evaluating all optical ultrabroadband core technology in today's market?
kissofdeath 12/4/2012 | 8:12:54 PM
re: Calient Cuts 60 Jobs As somebody pointed out a while ago, looks like being listed in the LR top 10 is indeed a kiss that kills..
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