Ceyba Rattling in Ottawa

Ceyba Inc. has been forced to send a third of its workforce packing, but the company's not giving up on its future, though signs are clear it will be an uphill battle.

The next-generation, long-haul startup, once the toast of Ottawa's optical community with a record-breaking $93 million warchest, cut about 34 percent of its staff this week, leaving about 125 workers. While employees throughout the organization were affected, many jobs were cut in R&D, where the startup has most folk assigned.

The layoff is the second in Ceyba's short life, following a cut of 50 from its roster of 250 last July (see Startups Adjust to Long-Haul Reality).

Ceyba spokespeople say the cuts were made to douse cash burn and prepare for more funding. Ceyba plans its next round for the second half of 2003, though it won't disclose amounts or investors involved.

These days, another layoff on its own is hardly news -- hence, Light Reading's weekly Headcount roundup. But Ceyba's one of the leading startups in the long-haul space, along with Innovance Networks, PhotonEx Corp., and Xtera Communications Inc. Its progress -- or regress -- reflects the prospects of the whole market segment.

And prospects seem to have changed little recently. Carriers are still resistant to spending on long-haul networks, where pre-downturn overspeculation led to the current overcapacity (see What's Cookin' at Core Startups?).

Still, Ceyba insists interest hasn't burnt out. Two leading North American carriers have selected Ceyba for their networks, according to CEO Scott Marshall. While there's no prospect of live deployment, given the current capex cutback, he maintains that a range of long-haul routes -- more than 177 by his count -- will need revamping over the next several years.

"Given time, we'll be successful," he asserts.

There are negative and positive industry views on Ceyba's stance. According to Tom Nolle, president of consultancy CIMI Corp., startups like Ceyba face a problem because their products aim to replace existing infrastructure. The keyword is "replace": Carriers aren't biting right now.

Further, Nolle says the startups just aren't providing enough electrical on-ramps and interoperatility for their wares. And they're not addressing the metro space sufficiently, where core buildouts are likely to happen first. "If [the startups like Ceyba] can't get started with what carriers need in the near term, they probably won't live to see them in the long term," Nolle says.

Another analyst takes a more positive view of Ceyba. "I think of all the optical startups, Ceyba's got the best shot to succeed," says Mark Lutkowitz, principal of Telecom Pragmatics Inc., a consultancy. In his view, Ceyba's in better financial shape than its peers, though he admits that's not saying much. What's more, he thinks Ceyba's got a better handle on the needs of carriers, exhibited in its shying away from emphasis on 40-Gbit/s networking. Ceyba's technology, in his view, isn't too futuristic for customers to digest.

Ultimately, Lutkowitz says it may take a key partnership, in the form of an investment and subsequent acquisition, to bring that technology to market successfully. That's a pattern already set by Ciena Corp. (Nasdaq: CIEN) and WaveSmith Networks Inc. (see Ciena Nabs WaveSmith).

Ceyba's Marshall says that's a possibility. The market will have to get a bit better before that can happen, though. "The big guys are so busy trying to clean up their own finances... Someday, when we'd be accretive to them, it might make sense."

— Mary Jander, Senior Editor, Light Reading

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The outsider 12/5/2012 | 12:00:48 AM
re: Ceyba Rattling in Ottawa Even at 50% pay, they don't have enough cash to last till the end of this year.

The outsider
joe_average 12/5/2012 | 12:02:02 AM
re: Ceyba Rattling in Ottawa hwg434:

You must be an optimist. From your post, "only" 1/3 of a group of highly skilled engineers have been unemployed for several months. 33% unemployment sounds to me like a crisis but then again I'm not an optimist.
hwg434 12/5/2012 | 12:02:03 AM
re: Ceyba Rattling in Ottawa I hate to say it, but it does sound all too familiar...

That said, I don't think the Ottawa job market is that bad. After being caught in the Axe-celight fallout, I found another high-tech job within 2 months.

The ex-celight folks have a yahoo group, and a poll there (highly scientific, I know), shows about 2/3 of those looking have found work, mostly full-time, some contract. Only 1/3 are still unemployed. That's not as dismal as some would have you believe.

I hope Ceyba makes it, but if I was there I would start getting resumes out.
TelCoEngineer 12/5/2012 | 12:02:40 AM
re: Ceyba Rattling in Ottawa I hear they have gone to "one week on, one week off" to save burn and extend to the 3rd quarter.

There is no 03 (or even 04) recovery for the carriers that have expressed interest. They are into 05, and Innovance can't make it that long, even with working half time.

Maybe they are trying to hang on until the VCs see them within 12 months to revenue?
lightshow 12/5/2012 | 12:04:18 AM
re: Ceyba Rattling in Ottawa Does anyone know what is happening at Innovance? Have they got any more money and have they done any trials?
bubble-boy 12/5/2012 | 12:04:30 AM
re: Ceyba Rattling in Ottawa No field trials:
Global would like to get them in the network, but working through their bankruptcy. Sorry Maximus no denarius right now.

No lab trials:
L(3) likes them, but digesting that Genuity enchilada will take a while. "Burp".....

No RFP traction:
Too bad the boys writing the RFPs are just securing their position...."Do you have a multi-terabit, 40G, ROADM, PXC, 10GE, all optical, scalable system ? For the same price as the NT / LU Sh**t I have in my network and warehouse ??".......

VC cracking the whip:
You guys blew through $100M, and now want how much more ??

Sales Team:
Every body loves us, we are so close, I have another meeting /golf / dinner appointment coming up, trust me ........
optopuss 12/5/2012 | 12:04:31 AM
re: Ceyba Rattling in Ottawa All of the above unfortunately. With Marshall, anything is possible.
optopuss 12/5/2012 | 12:04:31 AM
re: Ceyba Rattling in Ottawa Not surprised Ceyba is having problems securing additional financing. Not one cutomer field trial yet & the VC's are apparently not too impressed with their execs. Just ask ex-NP folks. Oops..
optopuss 12/5/2012 | 12:04:32 AM
re: Ceyba Rattling in Ottawa Someone who was laid off from Ceyba mentioned that they never had a field trial. Apparently looking at GX as a last resort.
dljvjbsl 12/5/2012 | 12:04:52 AM
re: Ceyba Rattling in Ottawa An indication of the state of the high tech industry in Ottawa and concomitantly the state of the job market can now be seen on March Road. OCRI (Ottawa-Carleton Research Institute) is the local polyanna group for the high tech industry. No matter how bad the situation is, we can always rely on a very optimistic forecast form OCRI in an Ottawa Citizen news story. However the lawn in front of the OCRI offices has now been graced with the new Ottawa icon. There is a large G«ˇFor LeaseG«÷ sing there. One of the tenants in the building OCRI occupies has moved out and now OCRI sports the same G«ˇFor LeaseG«÷ sign that graces so many of the buildings along March Road. One knows whrn one is in the high tech area of Kanata when the buildings are fronted by the new 'For Lease' signs and empty lots with 'Build to Suit'.
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