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Cinta Gets Leaner, Cites Attacks

Light Reading
News Analysis
Light Reading
10/18/2001

Cinta Networks Corp. laid off about one third of its staff today, reducing the number from approximately 100 down to about 70 employees.

In a move that surprised many observers, the company, a startup networking company working on long-haul technology, blamed its declining fortunes on the September 11 terrorist attacks. The company cited those attacks, along with the softening carrier market, as reasons for tightening its belt.

“What we are doing is consistent with the market,” says John Vaughn, president and CEO of Cinta. “The softness in the economy, especially since September 11th, has made it difficult to raise money. We’re just taking steps to make sure that we remain strong when the market rebounds”

Some venture capitalists say that startups blaming their woes on September 11th may be overstating the issue.

"It's true that investors are a bit more wary, because they are afraid that carriers will push back purchases," says Fred Wang, general partner with Trinity Ventures. "But I think September 11th is a convenient excuse for a lot of folks. Even if September 11th didn't happen, the vast majority of them would still have the same struggles closing their financing."

Cinta raised about $64 million in its second round of funding back in October of last year, which was supposed to support the company through the first quarter of 2002. Vaughn says that the company is still on plan, but that recent economic conditions have forced them to be more conservative about their spending. He fears that further delays in securing another round of funding could put the company in jeopardy.

While cuts were made across the entire company, Vaughn says that the sales and sales support teams were the least affected. The company has already completed two lab trials and is about to enter a third, he claims. Essentially, with the product development complete, many of the workers that had been in product development aren’t needed anymore, he says.

This is the second round of layoffs at Cinta in the past two months (see Startups Suffer Setbacks and Wu-Fu Chen Startups Hit the Skids). The company let go of 17 employees back in September right after the September 11th attacks. Back then Vaughn denied that the recent tragedy had influenced the company’s decision to make cuts. But this time he cites the attacks as one of the reasons that the company is having trouble raising money in its third round of funding.

“Funding was tight before, but September 11th has exacerbated the challenge,” says Vaughn. “The name of the game now is to try and conserve cash, and that means lowering our burn rate.”

In some respects, it makes sense that Cinta would be struggling to close this round of funding, given the fact that it is targeting the long-haul market with its switching product. This is reportedly one of the weakest segments in the optical networking industry, as pundits claim that there has already been an overbuild of capacity in the long-haul networks.

But it seems that not every startup in the long-haul market is having trouble securing financing. PhotonEx Corp., which is developing a 40-Gbit/s transport product for the long haul, just announced a $90 million second round of funding this week (see Photonex Scores Huge 3rd Round).

"There are still some large fundings that are going on," says Trinity's Wang. "Cinta is in a very crowded and over-funded market. The ones that are getting money now tend to have a differentiated story. They also usually have customers that can talk to investors." — Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com

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sigint
sigint
12/4/2012 | 11:03:42 PM
re: Cinta Gets Leaner, Cites Attacks
These words are not just curious, they are despicable. This is no way to treat engineers who have probably kicked a great job elsewhere to participate in what they believed to be a great product.

Yes, layoffs are a reality one has to live with. But surely, insensivity and opportunism of this magnitude is unpardonable. People aren't scrappable commodity.

My hope, and prayer, is that design engineers have left in enough undocumented, hard to detect bugs which would make life miserable for the "privileged" few that are spared the guillotine.
let-there-be-light
let-there-be-light
12/4/2012 | 11:03:40 PM
re: Cinta Gets Leaner, Cites Attacks
Gonzo,

You want a constructive comment, how about this one:

Top-Quality Constructive Comment made by a "legendary optical networking entrepeneur" (two guesses who that was):

GǣIn the old days people said, 'We make money the old-fashioned way; we earn it.' But in optical networking we say, 'We make money the new-fashioned way G we print it!' "

simails
simails
12/4/2012 | 7:42:11 PM
re: Cinta Gets Leaner, Cites Attacks
wu-fu's money printer is really screwed.
The closure of Geyser Networks earned him
the bad reputation.
Jey
Jey
12/4/2012 | 7:42:10 PM
re: Cinta Gets Leaner, Cites Attacks
we predicted Cinta would die last month -- it happens now!

http://www.lightreading.com/bo...

Following Cinta, the HYPE company --- Atoga will die soon. Both companies use tunable lasers which are far from mature and too expensive. Atoga said they use Agility tunable lasers, but I was told by
http://www.lightreading.com/do...

Agility that they had delived less than 20 modules to the Atoga for hyper. How does Atoga make their
systems? Atoga announced many news that they had "customer field trial" and "products in 3/01 and 9/01". Does anyone see their products? Many readers have predicted Atoga is a HYPE company in January 2001, see the article talks under the website:

http://www.lightreading.com/do...




opticguy
opticguy
12/4/2012 | 7:42:09 PM
re: Cinta Gets Leaner, Cites Attacks
I agree. I was not impressed by the management who interviewed me last year. Glad that I turned down their offer.

My guess is they will let go 30-40 people soon to conserve cash. Their hope is the VC climate will be better in 2002. Yeah!! Go dreaming !!!!!
LightWallet
LightWallet
12/4/2012 | 7:42:01 PM
re: Cinta Gets Leaner, Cites Attacks
Curious words from John "your" Gaughn that the folks involved with product development were no longer necessary and that he saw fit to retain sales and marketing. In light of the number and specific individuals let go, I say good luck to Cantarutti and team to finalize the product release, get it ready for revenue generating installations, secure materials in order to build their systems, get the systems built, install and support the system as well as pay the bills and collect the money. More likely the remaining employees in sales are busy working their phones for new jobs and not new customers.

To all better luck next time around!

LightWallet


startup_dreams
startup_dreams
12/4/2012 | 7:42:00 PM
re: Cinta Gets Leaner, Cites Attacks

Once I was Wu-Fu Chen's follower, so I was excited and joined Geyser Networks. We worked hard and got a pretty decent product.

There was a first lay off at Geyser around April, and shut downthe company last month. There are couple of reasons, that CEO was completely failed to raise the money, and management team so immature that they just blindly followed him and the end result is the company got shut down.

It was hard to understand I lost the job, but many companies are going down, so I slowly digested the fact.

But the only unanswered question is ....

Where is Wu-Fu Chen when everything was going down? Geyser was one of his favourite company when everything was flying in colors.

- He wasn't there when the market was tough to raise money.
- When they closed the company, he didn't even showed up, and he didn't even bothered to address his people.
- When they closed the company, they asked the people to leave the same day. No severance paid to any one.
- Lots of cheques got bounced after they closed the company.
- Lots of people who paid their money from their pocket for company expenses, weren't able to make claims.
- They didn't even address the 401K transfer properly.

We can blame VC's and management for not closing the company properly. But after all lots of people joined this place, even including management team just because of Wu-Fu Chen.

He was regarded as a Number 1 in Optical Top Ten at one time.

But I think a good leader should do right things both in good and bad times.



jssreenath
jssreenath
12/4/2012 | 7:41:56 PM
re: Cinta Gets Leaner, Cites Attacks
Isn't a shame, wow, Imagine, if the September 11th attacks had not taken place, Cinta would be flying high and a market leader. What stupid Marketing guy thought "hey, if we blame it on the terrorists, everyone will overlook the technical problems we had!" Come on, Its like saying the A's would have beaten the Yankees if the Terrorists attacks hadn't taken place!
charlietuna
charlietuna
12/4/2012 | 7:41:44 PM
re: Cinta Gets Leaner, Cites Attacks
you bet!

another firm built on shameless PR - and how the media sucked it up!

lots of sizzle
no steak
reality_slap
reality_slap
12/4/2012 | 7:41:43 PM
re: Cinta Gets Leaner, Cites Attacks
Add Ellacoya to that pile...are those guys still around?
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