MOUNTAIN VIEW, Calif. -- Ditech Communications Corporation (Nasdaq: DITC) today announced its plan to halt the development of its Titanium optical transport system product and focus its efforts on building its existing optical subsystems and echo cancellation businesses. In the optical area, Ditech will leverage its Titanium systems' technology and engineering expertise to develop more advanced optical subsystems products, including network elements such as optical amplifiers and transponders that form the core of a carrier's transmission network. As a result of this decision, Ditech will consolidate the engineering organizations of its optical subsidiary, Altamar Networks, and implement a restructuring of company operations and workforces throughout its Mountain View, UK, and Australia facilities. Among those changes will be a workforce reduction of approximately 30 percent over the next sixty days, reducing the headcount from 294 to approximately 200. "The deterioration in the long-haul systems market-a deterioration that has accelerated in the past 90 days-has prompted review of our strategic direction," said Tim Montgomery, Ditech's president and CEO. "We also had to consider the carriers' increasingly conservative and incremental approach to network expansion, which has made carriers more reluctant to consider new entrants and new architectures. Therefore, despite our strong belief in Titanium's promise, the financial drain from Titanium has ceased to be justified. We will now leverage the Titanium optical systems technology and expertise to expand our business in the optical subsystems market, where we've been successfully selling products since 1997. Last year our optical subsystems sales totaled $14 million. With the strong infusion of Titanium technologies and engineering resources, plus incremental sales resources, we believe we can grow this business substantially." Ditech Communications Corp.Altamar Networks Inc.