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C-COR Gets Gored

Craig Matsumoto
1/4/2006
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C-COR Corp. (Nasdaq: CCBL) is making some changes that will shut the doors on the Sunnyvale, Calif., home of acquired startups Alopa Networks and Lantern Communications.

Neither company's products are being discontinued, but the 30-employee office is being closed as part of a 225-employee layoff announced yesterday. The cuts include a shifting of some manufacturing to Tijuana, Mexico, from Wallingford, Conn. The changes will leave C-COR with 1,500 employees. (See C-COR to Cut 225.)

The moves are a concession to the disappointing revenues of the past year. Hoping to take quarterly revenues past the $70 million mark, C-COR acquired five companies during 2004 and 2005: Lantern, video server vendor nCube, Ethernet transport gear maker Optinel Systems, and OSS vendors Alopa and Stargus. (See C-COR Extinguishes Lantern, C-COR Acquires nCUBE, C-COR Opts for Optinel, and C-COR Purchases Stargus.)

But sales stayed stubbornly in the $65 million range, and while bookings surpassed C-COR's goals, the lead times involved mean revenues won't arrive until future quarters. With losses continuing, C-COR decided to shore up.

Signs of trouble brewed early last year when C-COR announced revenues would miss targets. From there, it's been downhill, with the stock losing more than 40 percent of its value during 2005. C-COR stock was up 35 cents (7%) at $5.39 early this morning.

"Now it's time to buckle down into three key areas and take our lessons learned," chairman and CEO Dave Woodle said on a conference call with analysts this morning. Those three areas are: cable broadband access, both for residential and business customers; new "on-demand" technologies such as inserting targeted ads into the cable video stream; and OSS products.

Specific to Lantern, C-COR is ditching plans to expand its cable transport business into the telco world. C-COR's chances there were just too slim to justify the continued expense, Woodle said.

C-COR isn't abandoning telecom, though, as it sees promise there for nCube, a spokeswoman told Light Reading. NCube's software is used for video-on-demand and ad insertion.

It's unclear whether Lantern will continue R&D on its product line, the spokeswoman said.

C-COR opened the Sunnyvale office as a combined home for the Alopa and Lantern employees it acquired, as both startups had been based in that city. Some of those employees will join the ranks of those cut, but some will be offered the chance to work from other locations or to work from home, the spokeswoman said.

The Sunnyvale closing comes just a week after the shutdown of Luminous Networks Inc. , Lantern's foil in Resilient Packet Ring (RPR) technology. Circa 2001, both startups had pushed for the technology, eventually codified in the IEEE 802.17 standard but later had trouble battling Cisco Systems Inc. (Nasdaq: CSCO) and Nortel Networks Ltd. . (See Luminous Loses Its Luster and Incumbents Grab RPR Mantle.)

As with C-COR's restructuring in 2004, analysts seem to think the company is making the right moves. "We think this will enable C-COR to reach profitability earlier," wrote Brian Coyne, an analyst with Friedman Billings Ramsey & Co. Inc. , in a report issued this morning. "We believe management is undertaking this effort at a time when its business outlook remains solidly intact and the company continues to win new software orders."

Woodle said he is "comfortable" with analyst estimates for its first quarter. For its second quarter, which ended in December, C-COR is expected to report revenues of $65 million and losses of 13 cents per share, according to Thomson First Call .

— Craig Matsumoto, Senior Editor, Light Reading

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data_guy
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data_guy,
User Rank: Light Beer
12/5/2012 | 4:10:19 AM
re: C-COR Gets Gored
Interesting that both RPR offerings in the cable area didn't work out as next-gen transport offerings.

At a previous job, having inherited a *very* early form of RPR (unidirectional ring ethernet, just drop the "resilient" part!), it was quite exciting to see RPR go into the standards process.

Much excitement in the cable-equipment-provider area that this was going to be *a big thing*.

The MSOs, alas, grew comfortable putting their video and data across generic data platforms (NGsonet, cisco 10GbE, etc), this being driven less by the comfort of putting video on those very un-video-friendly platforms than the need to carry lots of internet data, and not being able to afford 2 seperate networks. Part of this was also turf battles between those running the Data Network and those running the Video Network.

Ahhhh, memories of the cable business.

DG
data_guy
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data_guy,
User Rank: Light Beer
12/5/2012 | 4:10:18 AM
re: C-COR Gets Gored
Well, in the long run I can agree that there's no need for it.
If sonet had not undergone its mini-revolution though, RPR would be some hot stuff.

Just turned out there wouldn't be much need for RPR, since it wouldn't do anything really different and RPR was evolving into something that would cost about the same as sonet.

DG
OpticOm
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OpticOm,
User Rank: Light Beer
12/5/2012 | 4:10:18 AM
re: C-COR Gets Gored
I never thought this technology was good for anything but discussions during committee meetings.
So, the chasing companies were lost cases from the beginning.
Especially Lantern.
godfather
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godfather,
User Rank: Light Beer
12/5/2012 | 4:10:16 AM
re: C-COR Gets Gored
This is an acute case of management not putting their money where their mouth was. Management did not have the guts to spend money in order to make money. Then, when the going got really tough, they simply gave up.

They spent $20m buying Lantern (good IP for the price). Then they spent money getting the team back in place.

Then they decided they could not afford to put in a sales force capable of selling an IP product!

Question: How many salespeople in C-COR could spell IP?

Answer: ZERO

Question: So, how many salespeople did C-COR hire, who could spell IP?

Answer: ZERO!

Question: What about the NCUBE sales people, surely, they knew how to sell an IP product?

Answer: Are you kidding? The NCUBE folks are still selling more IP boxes from Cisco than Cisco salespeople sell to MSOs!

Bottomline: Beware of companies pretending to jump into a new era and then not spending the money to build up a team that could actually do it.

Bye bye C-COR. If they're lucky, someone will acquire them and put them out of their misery.
MrLight
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MrLight,
User Rank: Light Beer
12/5/2012 | 4:10:15 AM
re: C-COR Gets Gored
The one-two punch of one, delays in standardization of RPR in part due to Cisco throwing their weight around and two, of RPR being initially data focused hurt RPR with the Telcos. Telcos still had a lot of TDM. The MSOs on the other hand that did not have a lot of TDM found RPR was what they needed to aggregate the packets in a robust manner.

To compound things further the RPR offerings from the startups were only 2.5Gbps and were in many cases not really GÇ£resilientGÇ¥, which meant the startups were caught with the need to change their products to get to something that could compete with Metro DWDM if they wanted to get into the Telcos, but at they same time they needed to sell what they had to get review to please the VC and pump up their value.

Cisco put further pressure on them with their Dynamic Packet Transport (DPT) version of RPR, that let the MSOs buy from an GÇ£old reliableGÇ¥ supplier.

To compound things the market was shifting more and more to DWDM , Next Gen SONET/SDH , PE routers, and GigE and away from RPR. Let us not forget the telecom slowdown.

But RPR is not dead, it is still moving along, look at the 10Gbps IC from Cortina , however not enough to base a company solely on RPR.

If only things had been differentGǪ

MrLightGǪ Still like RPR, but now as a building block in a system and not the system.


The MSO space looked like it might but the MSOs moved to 10Gbps much qucik then ecritical mass before SONET/SDH with
fiberous
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fiberous,
User Rank: Light Beer
12/5/2012 | 4:10:14 AM
re: C-COR Gets Gored
Nader Vijeh was the only smart one who made his
bundle and left the others holding the candle
in the dark while he bolted for the door.

canadian
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canadian,
User Rank: Light Beer
12/5/2012 | 4:10:10 AM
re: C-COR Gets Gored
I agree Mr. Light.

The only thing I would correct is that Lantern (C-COR) had 10GigE/OC-192 RPR from day one. They had a GA product in 2002.

Their technology also was not 802.17 but was a flow based approach - ideal for video delivery, etc. I guess that would have been the reason for C-COR to enter the market with Lantern.
somedumbPM
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somedumbPM,
User Rank: Light Beer
12/5/2012 | 4:10:09 AM
re: C-COR Gets Gored
Wow, I think RPR is far from dead, but in no way did I ever think/know of a box that would be manufactured solely for RPR. Of course I have never even seen one of the boxes from these little guys anywhere either.

My first experience with RPR was with GigE cards we added to the existing legacy SONET OC48 boxes back in like 2001. Now the cards are just smaller and more flexible that we use in the newer boxes and almost every carrier class box I have now does SONET/RPR/DWDM and the lastest ones available (shipping and in use by others, not vaporware/labware) DSL/GigE/10GE as well.

Of course as a one time customer of the cable guys, and remembering my mind numbing calls their tech support, I have absolutely no confidence in anything they provide.

I had quite a few fiber cuts during this years storm season and never lost a ckt completely. During some of the post-storm operations the cable guy sitting beside me in the Emergency Operations Center is asking me where my cuts are geographically as his means of identifying where his cuts may be - great monitoring software and troubleshooting there bud - hehe!

The Microsoft - oops I mean, Cisco guy came in and told me he had something that was going to make me want to rip out all of my existing boxes and replace them with 15454s. He went on and on telling me about this new RPR technology until I told him I had been running RPR for over a year now.

data_guy
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data_guy,
User Rank: Light Beer
12/5/2012 | 4:10:09 AM
re: C-COR Gets Gored
canadian: yes, that's pretty true. It was more of the MSOs not really wanting RPR if it meant a new box.

The lantern box would have been good to grow into a switched video box, which is where things will probably go.

DG
kool
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kool,
User Rank: Light Beer
12/5/2012 | 4:10:08 AM
re: C-COR Gets Gored
What was that about "rats deserting a sinking..."?

On the other hand, if he saw the writing on the wall, so did the others. At least they stayed and tried to make a success out of it!

Fiberous said:"Nader Vijeh was the only smart one who made his bundle and left the others holding the candle in the dark while he bolted for the door."
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