Optical components

Components Casualty Count Climbing

Casualties among component startups are increasing rapidly, more rapidly than might be readily apparent, to judge from health checks conducted by Light Reading.

For a kickoff, some recent acquisitions of startups aren't a case of exit strategies being successfully accomplished. They're the opposite -- assets sales forced upon companies that otherwise would probably have gone bust, which often leave original investors with little or no rewards. Recent examples of this include:

In many ways, these startups are the lucky ones. Their assets were sold before the company lost too much momentum, and before its workforce dispersed to the four winds. As a result, some of the workers were able to continue with the new employer.

Plenty of other component startups have simply shut up shop and quietly disappeared. Recent closures include:

  • Qusion Technologies, a modulator-maker whose Website has been unavailable since October 4 (see Qusion Touts Wideband Modulator). When Qusion first appeared on the scene its technology, rather unfortunately as it turns out, was likened to that of Nanovation, a defunct integrated optics startup whose demise had been followed in the press like an episode of Big Brother (see Nanovation in Crisis, Nanovation Files for Chapter 11, Nanovation Up For Sale, and Nanovation Goes Bust).

    Qusion executives could not be reached (the company's phone had been disconnected), but a spokesperson at Emcore Corp. (Nasdaq: EMKR), which invested in the startup, confirmed that Qusion is out of business.

  • Trillium Photonics. The Ottawa-based startup closed operations on Tuesday, October 1, according to an article in the Ottawa Business Journal. Trillium, which made optical amplifiers, had scored $29 million funding in January 2002, which was supposed to keep the company going until the end of 2003, the paper said. But seeing no improvement in the industry until after that time, the board decided to wind up operations in an orderly manner now.

  • Siros Technologies Inc. which scored $17 million in May 2002 to develop high-power VCSELs, closed down over the summer (see Siros Gets $17 Million in Funding ). Its facility and equipment went up for auction on Dovebid on September 6.

  • Lightwave Microsystem's facility is also up for auction with Dovebid, starting on November 11 (see Obituary: Lightwave Microsystems).

  • Onix Microsystems Inc., a MEMS subsystem startup, also appears to be preparing to close. The company's Website has been stripped down to a bare minimum, with all product, technology, and press information removed. Onix's executives could not be reached in person -- the phone system was only taking voicemail messages, which is not a good sign (see The Telltale Sign). It also appears that Onix's founder and director of business development, Meng-Hsuing Kiang, has recently left the company.

    One rumor suggests that rival OMM Inc. is in the process of buying Onix's assets. Conrad Burke, OMM's senior VP of sales and marketing says the company does not comment on rumors (sigh).

The list of dead startups is growing. Other ex-components startups include Haleos, Liquidlight, Northstar Photonics, Optenia, Opticalis, Optical Micro Devices (OMD), ProtoDel, Radiant Photonics, and Zenastra. Some, like Zenastra and Haleos, had their assets snatched from the dustbin some time after they actually closed operations (see Component Cannibalism? and Zenastra Reborn?). Plenty of other startups have changed focus, or been bought and then closed down.

While most of the tip-offs that Light Reading receives about startups in trouble turn out to be true, it can make a pleasant change when they're not. Our sources, it appears, were wrong about K2Optronics Inc., a developer of external cavity semiconductor lasers (see K2 Claims Laser Record).

Davinder Basuita, the startup's executive VP of sales and marketing, vehemently denies that the company was either closing down or about to have its assets bought out. In fact, he claims that, following successful customer trials, K2 is about to book its first orders. And the exit of players like Agere Systems (NYSE: AGR) from the components business has only strengthened his company's position, he says.

— Pauline Rigby, Senior Editor, Light Reading
single mode figure 12/5/2012 | 12:22:27 AM
re: Components Casualty Count Climbing Nlight photonics, has rajiv ramaswamy on it's advisory board. They are doing high power laser's for dwdm systems, Rajiv is not a laser physicist, but he did work for xros. And tellabs. I wonder how Nlight is doing?
BobbyMax 12/4/2012 | 9:33:14 PM
re: Components Casualty Count Climbing It was aerception in the minds of the VCs and serial enterpreauners that they have worldwide hold on the telecom industry. They also thoght they have on the entire world. But none of these proclaimations are true. These VCs projected an image that were going take over Russia, Japan and other Far Eastern Countries. This will never happen.

I canot conceive the existence of 0ver 850 Optical Component companies in the US. There is no need for these companies. Most of them would go out of business as soon as the VC provided money is gone.

I hope the Vss never go on road to raise money through propganda and false information.

Many component companies were established althogh there was no need for their products.
Pauline Rigby 12/4/2012 | 9:33:09 PM
re: Components Casualty Count Climbing Checking up on the health of 850 components startups is no small task, and we couldn't do it without help from readers. So please keep those tips coming.

Other startups rumored to be in trouble, but which I've been unable to confirm yet, include Digilens, Lightchip, and Wavesplitter. And I'm particularly interested the conclusion of the Onix/OMM story. If you know anything about the fate of these companies, please tell us by posting here, or sending a message privately to [email protected]


[email protected]
bw 12/4/2012 | 9:33:09 PM
re: Components Casualty Count Climbing Pauline, and LR,
One thing you can do is compile a list of optical start-ups, and list last round of funding (time and size), and also list head-count if you can. Apply some simple burn-rate, like $150K to $200K per head, you can probably get a good picture on who is survicing, and whois going away. This is more rigorous analysis than speculations.

Paddy MacGinty 12/4/2012 | 9:33:08 PM
re: Components Casualty Count Climbing Word on the grapevine is Digilens laid off a third of staff in the last fortnight. No news on the positions though.
Godzila 12/4/2012 | 9:32:09 PM
re: Components Casualty Count Climbing It is a sad state of affairs. OCP who has really no technical lead over anyone in this buisness has picked up a great innovator like Cielo.

OCP's strength is not in technology, but in making things cheap (and squeezing their vendors). Most of OCP's customers are happy for this transaction, but the litmus test is the integration of Cielo's VCSEL operation with those of OCP's. I think Cielo as a vendor made much more sense for OCP than as a part of this copmany. Afterall, OCP could squeeze them for the very last penny. As a part of OCP all Cielo's expenses are OCP's, they cannot operate Cielo at a loss.

Vetiver 12/4/2012 | 9:28:43 PM
re: Components Casualty Count Climbing The time was, to have a successful startup all you needed was a good idea and a few good technical people. Times being what they are, you actually need good management to survive. Stretching back to the days when OCP was PCO, OCP now has a big advantage in the market. Having gone through downturns before the OCP management knows what to do and when to do it. The fact that they are buying now is a favorable sign that the components market is bottoming.

premium1 12/4/2012 | 9:28:20 PM
re: Components Casualty Count Climbing You know, I think that these companies always needed good management. The point of a startup is to become sustainable at a certain point, and alot of these eager entrepreneurs missed this vital point.
More surprising to me are the many VCs (and 'buy-side' analysts) who mis-valued many ventures.
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