Optical/IP Networks

Amber Networks Cuts Staff

Amber Networks Inc. blamed the softening economy today as it announced it has laid off about 12 percent of its staff (see Amber Cuts Workforce). The company's headcount now stands at 235 after the layoffs, says Alex Dobrushin, the firm's vice president of marketing.

The layoffs and cost cutting come less than one month after Mike Johnson -- a former Ascend Networks colleague of Amber Networks CEO Sam Mathan -- was brought on board as chief financial officer, a position that had been previously unfilled.

Amber has ambitious plans to compete with Cisco Systems Inc. (Nasdaq: CSCO), among others, in the edge router market. The company is marketing a carrier-class router whose primary feature is redundant routing cards that enable automatic failover. Only five months ago, Amber tripled the size of its corporate headquarters, moving to a 68,500 square-foot facility formerly occupied by Premisys Communications, in Fremont, Calif. (Networking Trivia nugget: Premisys was bought by Zhone Technologies Inc. Zhone is led by Mory Ejabat, the former Ascend CEO who was Mathan's boss at Ascend and who joined Amber Networks' board of directors in August 2000. Kevin Bacon could not be reached for comment.)

In a prepared statement, Mathan said the demand for the firm's products is still strong and the job cuts won't affect its ability to "continue with product deliveries and customer trials as planned."

Amber hasn't publicly said who its customers are, nor has it revealed which firms are evaluating its product. Dobrushin says the company is in "long-term trials" with nine carriers and "some of those are also investors."

Late last summer, the company closed on a $91 million round of financing. Light Reading reported that, given Amber Networks' high-profile board members and financial backers -- which include Williams Communications Group (NYSE: WCG), Enron Corp. (NYSE: ENE), and several investment bankers and venture capitalists -- the firm appeared to be on a fast track for an initial public offering (see Amber Suiting Up for IPO?). As of yet, Amber Networks hasn't made a move in that direction, and the firm hasn't spoken publicly about any new fund-raising efforts either (see System Startups 'Face Tough Year').

Dobrushin says Amber Networks is still fully funded and based its staff cuts only on the reductions in carrier spending.

-- Phil Harvey, Senior Editor, Light Reading http://www.lightreading.com
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kcufde 12/4/2012 | 8:29:29 PM
re: Amber Networks Cuts Staff pre-ipo's any way funded by the VC's. The lay off is not going to make any difference, instead they could have slightly decreased the salary taken by upper level management and some of the food expenses, which would have equalized their budget
allidia 12/4/2012 | 8:29:26 PM
re: Amber Networks Cuts Staff They are seeing a slowdown that is expected to last another 6 months or more. They built their staff to support a certain revenue rate and that is not happening due to the slowdown. If they dont reduce their burn rate through layoffs then they are forced to raise more money in a down market. What VC is in business to pay people to sit around for six months and twiddle their thumbs? Cut the fat and rehire when times change.
Amber is one of dozens who will come out over the next few months announcing the same. The ones who do it now are better off than those who wait and put themselves in a desperate financial situation.
stuartb 12/4/2012 | 8:29:19 PM
re: Amber Networks Cuts Staff "Amber was considered the most promising on the edge by the analysts."

There's a big difference between a good story and a good product. It's been a year since they announced the ASR, someone hasn't lived up to the hype...
kupfi 12/4/2012 | 8:29:19 PM
re: Amber Networks Cuts Staff I aggree. Layoffs should be the last resort.

However, they are most probably still far off from having enough revenue and customers to survive for long without layoffs.

Amber was considered the most promising on the edge by the analysts. If they are having problems then what about the dozens of other companies on the edge.

Most will probably go over the edge ;)
drone387 12/4/2012 | 8:29:15 PM
re: Amber Networks Cuts Staff >It's been a year since they announced the ASR

But it has been only 6 months since it went into beta trials at customers. Amber raised $90M last July back before the bubble collapsed. The CEO said it would take the company forward for the next 18 months. Amber undoubtably has a large internal valuation greater than what the market is currently supporting. By cutting the burn rate now, they hope to IPO next and avoid a big down round of funding. If we don't see enough major announcements over the next six months, then their strategy is in trouble.
Xcited01 12/4/2012 | 8:29:12 PM
re: Amber Networks Cuts Staff Amber is not making forward progress with new customers. And, like all others, will burn through their remaining cash and go out of business.

On top of that, their team is just as weak as their product, and their relationships with customers are few.

Mark my words - Xcited01 -
newgal 12/4/2012 | 8:29:06 PM
re: Amber Networks Cuts Staff Xcited01 - You sound like one of the folks who was let go...

"Amber is not making forward progress with new customers." - do you have a credible source that can confirm this?

"On top of that, their team is just as weak as their product, and their relationships with customers are few." - can you elaborate on this?

hughman 12/4/2012 | 8:27:24 PM
re: Amber Networks Cuts Staff Are you saying that the 'axed' aren't worth hiring? Was the technology based on such flawed thinking that they're now technologically poisoned?
Eagle 12/4/2012 | 8:19:39 PM
re: Amber Networks Cuts Staff I agree, Amber has no customers to date. They went GA in December and they have $0 recongnized revenue. Their box has nothing that customers want...Like features & interfaces.

Their Mgmt staff is very weak. Their solution to no sales is firing proven sales talent instead of listening to want customers are demanding. Like more robust features and additional interfaces.

CEO tries to do everything instead of hiring qualified people and let them do their job. Then maybe CEO could clean the house and direct company to build product that will sell and customers acutally could use in live networks.

Amber Networks is absolutley doomed...

crystalball 12/4/2012 | 8:19:16 PM
re: Amber Networks Cuts Staff Ouch, sorry to hear it. Unfortunately, reading these posting remind me of all the posts that came from Zaffire back when it cut and announced layoffs. It's like a carbon copy "you sound like x-employee with ax to gride, etc."
Much afraid that if this can happen to companies like Amber and Zaffire, the rest of this (DotCom like) industry is not far behind.
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