Astral Point Slims Down

Astral Point Communications Inc. announced today that it is laying off 45 people, about 20 percent of its staff, in order to conserve its venture funding during tight economic times. The company's headcount will drop to 205 from about 250 employees (see Astral Point Lays Off 20%).

The company now says it has enough cash to last 18 months.

In addition to laying off staff, Astral Point is also cutting costs by quietly scrapping its ON 2000 product line. The decision came down sometime in February when the company acknowledged that the box was targeted toward a market with eroding equipment prices and profit margins. "We decided as a company that it does not make sense for Astral Point to play in that environment," writes spokesman Kevin Whalen, in an email interview with Light Reading.

The ON 2000, originally announced in December 2000, was an access aggregation box for use in telecom hotels, multitenant buildings, colocation facilities, and customer facilities (see Astral Point Expands Product Portfolio). By shelving that box, Astral Point cedes the access space to Cisco Systems Inc.'s (Nasdaq: CSCO) ONS 15327 product, Fujitsu Network Communications Inc.'s 150ADX box, and products from Ocular Networks Inc., Mayan Networks Inc., and Lucent Technologies Inc. (through its acquisition of Chromatis).

"We have focused our next major platform development efforts on a next-gen product that is targeted at the larger carriers," Astral Point's Whalen writes.

Where does that leave Astral Point? Now a single product company, Astral Point is resolved to sell its ON 5000 box, a multiservice provisioning platform that sits in service provider points of presence (POPs) and telecom central offices; it competes with products from Redback Networks Inc. (Nasdaq: RBAK), ONI Systems Inc. (Nasdaq: ONIS), Metro-Optix Inc., and Cisco, to name a few. That product has been shipping since the fall of 2000.

The company says it has five revenue generating customers for the ON 5000 but has only publicly spoken about three of them -- Time Warner Telecom Inc. (Nasdaq: TWTC), Lighthouse Communications, and Advanced TelCom Group Inc.. The company also claims to be involved in 12 field trials with carriers, including two incumbent local exchange carriers.

Astral Point says it works with a third party to obtain equipment financing for its carrier customers, but it says that the financing company assumes all risk during such transactions.

And, amid rumors that Time Warner Telecom had cancelled its Astral Point contract from last year, both companies assert that things are going as planned. "Everything's still on track with us," says Bob Meldrum, a spokesman for Time Warner Telecom. Meldrum says Time Warner Telecom is still putting the ON 5000 through lab evaluations and making sure the box works with its back-office systems and other network elements.

Raj Shanmugaraj, Bill Mitchell, Bruce Miller, and Steve Sherry founded Astral Point in September 1998. The company's raised $113 million to date, and its most recent financing round was announced in September 2000.

-- Phil Harvey, Senior Editor, Light Reading http://www.lightreading.com
noitall 12/4/2012 | 8:31:17 PM
re: Astral Point Slims Down depends on the application...and the customers that end up showing real interest and paying the real money the company needs to survive. they scrapped an entire product line that had cost them millions to develop because in some applications, atm fabrics may be ok, in others they are d.o.a. ...but then again, as you say, the 5000 series is shipping and passing traffic in time warner's network, or very close...

i don't have any real insight into their development plans. but i'd be surprised if future generations of ap products looked like current generation products...who knows? not me.
broadbandboy 12/4/2012 | 8:31:19 PM
re: Astral Point Slims Down noitall: "what's wrong with a.p. is that they
built the product on atm principles and now they're doing the right things to correct the product and make it viable before spending themselves into bankruptcy."

The remaining ap platform is the ON 5000, and is based on a 20 Gbps ATM switch fabric. Are you saying that they are going to replace that core switching function? If so, why?
noitall 12/4/2012 | 8:31:36 PM
re: Astral Point Slims Down ny, do you know anything at all about how a company gets built? financed? launched? if you did, you wouldn't even comment on the vcs. they can add a lot of value and their money is very green, but they can seldom actually screw up a company on their own...especially when they live 3,000 miles away. what's wrong with a.p. is that they built the product on atm principles and now they're doing the right things to correct the product and make it viable before spending themselves into bankruptcy.

get it together ny. and go back to grade school to learn how to spell...i doubt you're witty enough to spin "looser" into some kind of pun.
silent mariner 12/4/2012 | 8:31:38 PM
re: Astral Point Slims Down Monday is actually the best day for relatively unpleasant events. Securing servers, etc. is a must. I would find it difficult to believe that astralpoint would not get more cash if business is expanding as they describe. There is too much at stake unless the product just fails.
NYGiant 12/4/2012 | 8:31:42 PM
re: Astral Point Slims Down This train is also being derailed by NEA.
Coneybeer is a looser.
samTheFish 12/4/2012 | 8:31:43 PM
re: Astral Point Slims Down Most companies seem to wait for Friday to release bad news, and let the weekend "buffer" the sharpness of the news a little. Just thought it was unusual to see this on a Monday.

It looks as if AP is trying to shed a little light on itself with the email interview with Light Reading. They've been very quiet for a while now. I thought it particularly interesting that they gave a number of months cash they have left.

So, based on what's in this article, what would you think are AP's chances for a 4th round?

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