C-COR Gets Gored
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