A Tale of Two Lightchips
Confluent Photonics Corp. snapped up the DWDM multiplexing group, while Digital Lightwave Inc. (Nasdaq: DIGL) bagged the network monitoring division (see Confluent Acquires Lightchip Biz and DIGL Acquires Lightchip Biz).
But Ian Turner, former CTO and senior VP of engineering at Lightchip, sees no inconsistency in the company's actions. Initially Lightchip promoted its optical performance monitors (OPMs) -- subsystems incorporating DWDM muxes and network management. Later, it also started touting DWDM muxes as an alternative to Arrayed Waveguide Gratings (AWGs) (see Lightchip Launches 'AWG Killer'). But although both products were based upon the same underlying technology of bulk diffraction gratings, says Turner, the markets they addressed were completely different.
"On the one hand, we had a engineering team concerned about how the OPM would fit into Cisco Systems Inc.'s (Nasdaq: CSCO) 15216 platform," he says, referring to Cisco's metro DWDM box. "On the other we had lab technicians and scientists worrying about performance and manufacturing in glass. It was obvious they were two separate divisions."
The designs of the bulk-diffraction gratings are different for the two product types, Turner adds, noting that Lightchip outsources the manufacturing of the bulk diffraction gratings to an offshore partner -- in other words there is no skills overlap in manufacturing.
When the board decided to look for a buyer, Turner took charge of the DWDM components side, while Lightchip's CEO Isadore Katz took the OPM side, and each set out to find the best suitor. Reading between the lines, the explanation seems to be that Lightchip simply could not sell both product lines to the same buyer.
The terms of the two deals weren't disclosed. Turner confusingly describes the deal with Confluent as "not as blunt as an asset purchase but not as complicated as an acquisition." But considering the fact that, according to Turner, Lightchip's investors ended up empty handed, it seems closer to the former than the latter.
In both cases, the deals involved the transfer of assets including intellectual property, inventory, manufacturing facilities, and employees. Before the sales, Lightchip numbered around 70 employees, it says, down from a peak of 180. Confluent took on 18 of those, including Turner, who becomes the new president and COO. Around 20 staff went to Digital Lightwave.
Is this the end of Lightchip? Well, yes and no. The group that went to Confluent will retain the Lightchip name, and it has taken over the Lightchip Website. A shell of the original startup was also left behind, consisting of bits and pieces that the company had developed but never sold. This will be wound up in an orderly fashion, according to David Hardwick, CEO of Confluent Photonics.
— Pauline Rigby, Senior Editor, Light Reading