Optical components

Chorum Tries Another Size

How big should a five-year-old optical components company be? Chorum Technologies Inc. is trying to find out.

The Richardson, Texas-based components and subsystems maker is shifting in size again, letting go about 13 of its 400 employees. CEO Scott Grout says the cuts have been in the areas of operations and manufacturing support.

At fewer than 400 folks, Chorum is down a few from the 561 it sported back in April 2001. Back then, Chorum had just cut 250 from payroll, down from the more than 800 people it employed at its peak (see Chorum Acknowledges Staff Cuts).

Senior managers departing Chorum last year included senior VP of corporate development Mike Decelle; VP and chief counsel Daniel Rabun; and VP of marketing and business development Doug Dickerson, who joined InterWest Partners as entrepreneur-in-residence (see Chorum Adds Four Veeps).

“Quite a bit of this is reallocating of resources,” Grout explains. “We have been more efficient on operations, and we need more help in sales and engineering.” Chorum plans to add more folks in sales and says it’s still looking forward to taking itself public when carrier spending levels off and the market allows.

Chorum’s fluctuation isn’t that odd, considering the circumstances surrounding it early last year. The company had been beefing up manufacturing staff to deal with two customers -- TyCom Ltd. (NYSE: TCM; BSX: TCM) and Nortel Networks Corp. (NYSE/Toronto: NT) -- and it was quickly adding legal and financial support staff to deal with an impending initial public offering (see Chorum Seals Deal With Nortel and TyCom Buying Chorum Filters).

Only a few weeks after filing, Chorum withdrew its IPO (see Chorum Withdraws IPO). Nortel, of course, melted down, and it’s likely not contributing much to Chorum’s revenues these days (see Nortel Fire Sale). And a former employee confirmed that the company stopped full volume production of its optical slicer filter products for its TyCom contract in late December.

Even though its last funding round of $54.7 million in October 2001 was a down round, you won’t see Grout complaining (see Chorum Scores $54.7M). “We have about $85 million in the bank, and revenue tripled in 2001, and we increased customers from two to about a 12,” he says. “All things considered, it was a pretty good year.”

— Marguerite Reardon and Phil Harvey, Senior Editors, Light Reading
Rightfielder 12/4/2012 | 11:00:38 PM
re: Chorum Tries Another Size Unless Chorum makes some big advances in system or sub-system level technology expect a slow death or buyout for the cash on hand....Bulk optics are dying fast if not already dead, and the component makers will be the last to see any benefit from renewed carrier spending....
Omega 12/4/2012 | 11:00:34 PM
re: Chorum Tries Another Size In talking about Chorm The statement is made "Bulk optics are dying fast if not already dead," yet I have read several articles on these pages stating that switches are needed and will be growing. Why would Chorm's products be dying? What non bulk optic switch can compete with the liquid crystal for small switches?

No I do not work for Chorm

Bill Johnson 12/4/2012 | 11:00:22 PM
re: Chorum Tries Another Size When the market turned South, it was the component/device companies that felt the effects first; however, they are also the first to rebound while the carriers will be last.
Call your nearest market analyst for confirmation (no, I'm not an analyst).

Chorum is positioned to be one of the top component companies of 2002. Don't believe...then just sit back and watch.
Rightfielder 12/4/2012 | 10:59:54 PM
re: Chorum Tries Another Size HMMM....If I remember correctly, the CLEC market collapsed between late 2000 and early 2001....CAPEX spending had actually diminished severely prior to that....Equipment makers / network suppliers (like Nortel and Cisco) began to push out component orders and eventually cancelled them....The component makers (like JDSU and Chorum) suddenly were left with huge inventories and full supply pipelines....The analysts may say the component guys will recover first, but based on their location in the "food chain" the evidence suggests otherwise....
inthebiz 12/4/2012 | 10:47:04 PM
re: Chorum Tries Another Size Absolutely, 100% agree.

Of course component makers are the first to benefit from carrier sending, because they have to ship to the telecom industry's product makers (Lucent, Nortel... etc) so they can in turn to sell to the carriers. So revenue hits compnents guys months before the telco product makers.

This is business 101! Or 001!

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