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End of the Road for Kymata?

Light Reading
News Analysis
Light Reading
11/25/2003
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Yesterday Avanex Corp. (Nasdaq: AVNX) dropped a bit of a bombshell on employees at its Livingston, Scotland, plant: It told them the facility would be shut down unless a buyer could be found (see Avanex to Pull Out of Livingston).

Livingston is the former headquarters of Arrayed Waveguide Gratings (AWGs) manufacturer Kymata, which was acquired in 2001 by Alcatel Optronics (Nasdaq: ALAO; Paris: CGO.PA), which was in turn acquired by Avanex just four months ago (see Avanex to Buy Alcatel, Corning Units).

"One of the VPs for Avanex came to the Livingston site yesterday and announced that the company is reviewing worldwide operations, which could impact the Livingston site," Derek Milne, spokesperson for Avanex said earlier today. An employee consultation forum was established at the site, he adds -- this is a legal requirement in the U.K. if redundancies are expected.

The news appears to have come out of the blue -- although unconfirmed rumors suggest that Avanex bought Alcatel Optronics for strategic reasons and always intended to wind down the Livingston facility.

It looks as if Avanex is trying to shut down the operations as quickly as possible. Consider this: For 20 to 99 redundancies (layoffs for you folks in the U.S.), the employee consultation period is 30 days. For 100 or more redundancies, the period is 90 days. Immediately after closing the acquisition, Avanex reduced the number of jobs at the Livingston site from 162 down to just fewer than 100. By making the initial job reductions concurrent with the acquisition, Avanex reduced the necessary waiting period.

Dr. Richard Laming, former founder and CTO of Kymata, who was appointed VP of Avanex's Livingston site on September 29, declined to provide any comment.

One reason behind Avanex's decision may be that right now there is little sign of life in the market for passive optical components -- the specialty at Livingston, which housed Alcatel's Fiber Bragg Grating business as well as Kymata's AWG product line. Avanex appears to be retaining Alcatel Optronics' active components operations in Nozay, France.

In related news, Avanex's CFO Bruce Pollock has resigned without explanation. He is replaced by interim CFO Linda Reddick (see Avanex Appoints Two Execs) Avanex's U.S. spokespeople could not be reached before press time.

— Pauline Rigby, Senior Editor, Light Reading

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Lichtverbindung
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Lichtverbindung,
User Rank: Light Beer
12/4/2012 | 11:13:31 PM
re: End of the Road for Kymata?
New CFO, Madavi on board, shut down of Kymata, what's next ?
dwdm2
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dwdm2,
User Rank: Light Beer
12/4/2012 | 11:13:30 PM
re: End of the Road for Kymata?
Does anyone know why Kymata could not stand on its own as a component vendor? They had technology, selling product, and paying customer (I think). My guess is it all began with the "get rich fast" scheme of the management.
dodo
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dodo,
User Rank: Light Beer
12/4/2012 | 11:13:28 PM
re: End of the Road for Kymata?
By closing the AWG and Bragg shops, it seems that Avanex is focusing on Thin Film passive devices.
Hello China, so long Europe:-)

Is this just cost-cutting measures?
Will Alcatel change the design of some of its Amplifiers- they are using Bragg GFF in some amps.
The battle among the big three continues...

sudhakar
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sudhakar,
User Rank: Light Beer
12/4/2012 | 11:13:28 PM
re: End of the Road for Kymata?
hi madavi ,
which country you are ?

Dr. Darklight
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Dr. Darklight,
User Rank: Light Beer
12/4/2012 | 11:13:27 PM
re: End of the Road for Kymata?
Kymata is and was a joke. Football size clean room, probably burned $200 million, kept changing platforms, FHD, PECVD, 6 inch, 8 inch back to FHD. In their lifetime probably never had more than $1 million in revenues.

This story is comparable to the Lightwave Microsystems(now continuing with Neophotonics) story. This conventional PLC stuff is a joke. Alcatel Optronics wasted their money (> $100million)- what were they thinking??? Avanex had the presence of mind to put this thing out of its misery. Good decision!

The Doc
dwdm2
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dwdm2,
User Rank: Light Beer
12/4/2012 | 11:13:14 PM
re: End of the Road for Kymata?
"In their lifetime probably never had more than $1 million in revenues."

I wouldn't discount them so easily... After all, the management sold Kymata very successfully twice; they pocketed all they could. If it was really just a 'joke,' could they sell it twice?
dwdm2
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dwdm2,
User Rank: Light Beer
12/4/2012 | 11:13:14 PM
re: End of the Road for Kymata?
dodo says, "...it seems that Avanex is focusing on Thin Film passive devices.
Hello China, so long Europe:-)"

Yep, this is the right time too, NSG's patent is expiring; someone has to break their monopoly... If not by break through at least by following through...
LightBeating
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LightBeating,
User Rank: Light Beer
12/4/2012 | 11:13:11 PM
re: End of the Road for Kymata?
Optronics should never have bought Kymata in the first place. That was a stupid move. Kymata was founded by one of the many mediocre, but egomaniac scientists that flourish in Southampton, with the sole intent of capitalizing on the wave of available venture capital to get rich quick. No sensible business plan, no breakthrough technology, no management expertise.

Then they shut down the FBG plant in Canada, the former Innovative Fiber, which had been the first, and the most succesful FBG business around, pre-bubble (it was well managed and profitable, before Alcatel). Transferring that operation to Scotland essentially meant losing all the know how, since 100% of the staff stayed behind. Another stupid move.

Ananex is doing the right thing. They got Optronics basically for free, and there were and still are very good bits of it, in Nozay, essentially active devices (980 pumps and DFB's). AWG's are doomed as a technology, and they can get FBG's elsewhere if the market ever revovers and people start buying pump diodes again.

You've got to give it to Avanex: they were founded on really crappy products, but their management is quite clever in building for the future. JDS beware...

LB


EnlightenMe
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EnlightenMe,
User Rank: Light Beer
12/4/2012 | 11:13:10 PM
re: End of the Road for Kymata?
Kymata seems to be just another domino in a long line of PLC failures. Is the future simply thin film filters and fiber bragg gratings? Who is investing in R&D to develop some seriously integrated PLC components that truly reduce cost and increase functionality? Moving everything to China gets you a one time reduction in cost and bump in productivity, but what happens next year? It seems the only chance for optical IC's is if China picks up the manufacturing pieces and begins to innovate on their own.
beachboy
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beachboy,
User Rank: Light Beer
12/4/2012 | 11:13:08 PM
re: End of the Road for Kymata?
Tooling charges, overheads and capital involved in semiconductor technology only make financial sense when there is massive volume behind it. Add into the mix very low yielding functions. Then try integrating some of these functions together.
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