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Optical/IP

Crescent is Waning

Crescent Networks Inc. is living on the edge.

The edge router company is hoping its customer trials turn into product revenues before it runs out of cash. This week it took measures to stretch its money further by firing about two thirds of its remaining staff.

The layoffs this week took the company's number down from about 62 to 21, according to Crescent CEO Gerald Wesel. That's down from the "over 120" employees it listed in February.

[Editor's note: The writing was on the wall at Crescent -- both literally and figuratively -- when Light Reading visited the company a couple of months ago; the company's kitchen had a sign that read "Please note: beer is no longer free."] Dr. James Luciani, Crescent's chief technical officer; Abhay Joshi, its VP of strategy and business development; and Len Major, its chief financial officer, were among those cut, the company says.

Since the beginning of the year, Crescent has lost other cogs in its management machine, including: Doug Faber, its VP of marketing; Curt Newton, founder and senior director of product marketing; and Kenneth Stumpf, its director of professional services.

In talking about the layoffs Wesel swims through a stream of clichés, comparing the telecom recession to the "Perfect Storm."

"I don't think anyone's immune to this," he says.

The layoffs overshadow some good news Crescent released this week regarding how its product, the VRX-1000 fared in tests with BTexact Technologies, the equipment testing arm of British Telecommunications plc (BT) (NYSE: BTY; London: BTA). The tests, paid for by Crescent, showed that Crescent's edge router was scaleable, dense, and friendly enough with other equipment to be considered by service providers.

"Throughout the duration of the test period, the VRX-1000 interoperated flawlessly with the other routers in the test network," the test results state. Those other routers included Cisco Systems Inc.'s (Nasdaq: CSCO) GSR 12016 core routers and its 3600 large office routers.

BTexact's route capacity test showed that the VRX-1000 could store 1,500,000 BGP (Border Gateway Patrol) routes and 200,000 OSPF (Open Shortest Path First) routes in its routing table. "That's a way of saying it can connect to and manage a lot of complicated corporate networks at the same time," says Jim Finucane, Crescent's senior VP of engineering.

The VRX-1000 was also shown to forward packets with IP payloads of 64 bytes to 1,500 bytes at line rate. In other words, it can handle packets of varying sizes without slowing down to think about how to handle each packet.

Another feature the test uncovered was the router's ability to control the speed of each interface, a feature known as rate-limiting. This allows service providers to charge for a wider variety of services using the same bandwidth connection.

Also remarkable is the fact that, due to a snafu in customs, BTexact only received one and a half days of the scheduled week of training, according to Wesel. That, he says, is testament to the product's ease of use.

Wesel says Crescent's next move is to keep supporting its six carrier trials with an eye toward fund raising once it has a paying customer. Wesel says he doesn't expect revenues to begin coming in until early 2003. Meanwhile, its archrival Redback reported $6 million in edge router revenues from four new customers during its most recent quarter (see Redback Sees Rebound).

Crescent raised a $24 million funding round back in April, bringing its total funding to date to $66 million (see Crescent Angles for the Edge).

— Phil Harvey, Senior Editor, Light Reading
www.lightreading.com Want to know more? The big cheeses of the optical networking industry will be discussing edge routers at Lightspeed Europe. Check it out at Lightspeed Europe 02.

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emma 12/5/2012 | 12:52:51 AM
re: Crescent is Waning They failed to get the Telecom Italia deal and now they're completely dead.

RIP...
gigeguy 12/4/2012 | 9:31:11 PM
re: Crescent is Waning At this week's NGN conference, John McQuillan characterized startups that were going into hibernation to try to weather the storm as the "walking dead", and that they're only practicing self-delusion. He said that by far the better solution is for them to shut down rather than to just keep on going until the money completely runs out, but it's the nature of startup management to be optimistic. Their boards need to be much more realistic about their real prospects.
TriteReading 12/4/2012 | 9:31:06 PM
re: Crescent is Waning I checked their Careers page today...

"If you are highly motivated, talented, creative and enjoy working in a team environment, then Crescent Networks wants to hear from you.

If you are interested in working at a fast-moving, privately held company that is developing a world class, service-delivery solution for the hot telecommunications industry, then you want to hear from us."

Yeah right!!! "Hot" telecom industry...? Crescent wants to hear from you...?
BobbyMax 12/4/2012 | 9:31:00 PM
re: Crescent is Waning It isnot clear what blinds VCs. It is simply insane to fund a company in the area of edge routers. There are over 30 edge router vendors.

The entire telecom industry has almost vanished with no chance of recovery. When the stocks of two of the telecom giants, Lucent Technologies and Northern Telecom, is trading below a dollar -- there has to be concern on the part of the shareholders and Wall Street to launch a full fledged investigation of these two companies.
52470 12/4/2012 | 9:30:50 PM
re: Crescent is Waning Can anyone name a venture fund round C or D company that actually has a shot of making it? They all look like zombies to me.

monarch of the light 12/4/2012 | 9:30:45 PM
re: Crescent is Waning Corona, another misterious west-coast fiasco, has been gasping for breath for over 3 years now. Anyone knows whats going on there? Heard it might be breathing its last soon. Seems like a bay area counter-part of comps like Gotham, Sedona...
ipnavip 12/4/2012 | 9:30:43 PM
re: Crescent is Waning I checked their Careers page today...

"If you are highly motivated, talented, creative and enjoy working in a team environment, then Crescent Networks wants to hear from you.

..........

Oops, majority have been laid off; no one/money was left to tear down the career page, a common theme nowadays...

SS 12/4/2012 | 9:30:38 PM
re: Crescent is Waning Perhaps Coriolis Networks has a shot of surviving the inclement weather. I think it is looking for a Series D round. We have to wait and see.

-Shutz Staffel
lights_out 12/4/2012 | 9:30:25 PM
re: Crescent is Waning
gigeguy wrote:
"At this week's NGN conference, John McQuillan characterized startups that were going into hibernation to try to weather the storm as the "walking dead", and that they're only practicing self-delusion."

------------------------------------------------

The question is, is this hibernation? I have to
say no, it isn't. It's more like the Alamo, and
we all know how that ended.

The majority of the people who have remained
onboard are managers and VPs. Of the reported 21
there are only something like 8 engineers left
on staff, some of them looking at no longer than
3 weeks before they are let go as well.
xrboc 12/4/2012 | 9:30:09 PM
re: Crescent is Waning Coriolis just laid off a few more quietly. They have about a month.
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