Headcount: Mississippi Spurning

Even though WorldCom Inc.'s (OTC: WCOEQ) creditors committee agreed to give incoming CEO Michael Capellas a huge compensation package -- which includes a salary, bonuses, and stock options averaging $12 million a year, plus about $18 million in restricted stock -- Capellas won't relocate to WorldCom's hometown of Clinton, Mississippi.

Of course, the bankruptcy judges may yet reject Capellas' excessive pay plan, but the incoming WorldCom chief has already made one thing clear: No amount of money could justify a move from Virginia to the land of Trent Lott. (Mr. Lott, by the way, is Headcount's nominee for made-up position of Senate Majority Bigot.)

Before Capellas, New Jersey's John Sidgmore also opted to run the company remotely during his short stint as WorldCom's CEO (see Sidgmore Takes Control at WorldCom).

With so many not wanting to head south, Headcount wonders if Mississippi will change its state motto from "Virtute et armis" (By valor and arms) to "Warm Weather and Cold Shoulders All Around"?

While you ponder such lunacy, we'll review some of the past week's most interesting hirings and firings:

  • Sources say Corona Networks Inc. let go about 50 folks in early November, leaving the company with between 65 and 75 workers. Corona's investors have extended the company a bridge loan while it continues to raise a badly needed $20 million round. Why $20 million? Corona has been courting Alcatel SA (NYSE: ALA; Paris: CGEP:PA) for a technology development deal, and sources say Alcatel will only agree to let Corona develop technology for it if the startup has money in the bank. (Damn smart, those French.) Meanwhile, talks between Zhone Technologies Inc. and Corona have cooled, and Zhone has gone off to look at other IP edge router/subscriber management services companies (see Long Holidays).

    Headcount hasn't been able to reach Corona executives. We did, however, get a call from Corona's administrative assistant and receptionist, Patti, who refused to patch us through to CEO Ramandeep Singh or Michael Damena, the company's senior director of business development and marketing.

    "I just think you're a terrible company and I think you shouldn't be on the Internet," Patti says. "I'm not going to transfer your calls... there is nothing by law that says I have to give you any information about this company for your Internet rag sheet."

    Headcount wonders if venture capitalists have had as tough a time getting past Checkpoint Patti as we did.

  • Just before Thanksgiving, C Speed Corp. cut its staff and began shutting down shop at the request of its backers, Advent International and Tallwood Ventures. In a December 3 letter to C Speed shareholders, C Speed President and CEO Alfred Hildebrand asked shareholders for consent to dissolve the company.

    In an interesting twist, an informed source says Advent and Tallwood turned right around and formed AdTall Corp. using C Speed's assets and intellectual property. It's not clear how many C Speed folks were hired back, but it is clear that C Speed's backers have found a slick way to dodge the startup's debt obligations.

    C Speed peaked at 68 workers in March and had dwindled to about 12 people at the beginning of the holidays, according to one former C Speed executive.

  • Tropic Networks Inc. has cut 25 percent of its 152 person workforce, according to several published reports. Last week the company announced an unspecified number of layoffs and said it was working to extend its Series B funding round (see Tropic Refocuses, Lays Off). The round initially closed in February 2001 for $60 million, and now Tropic is hunting for $20 million more from its existing investors. Tropic had cut its ranks to about 150 in October 2001 (see Tropic Joins Canadian Cutback Crew).

  • Alvesta Inc. has sold its intellectual property and inventory to another company, according to Alvesta's founder and chief technology officer, Dubravko Babic. "I can't tell you who it is, but the sale is final," he says.

    Babic says there were only six people employed at Alvesta at the time of the sale. "We were shutting down," he says. Alvesta was backed by Intel Corp. (Nasdaq: INTC) and Cypress Semiconductor Corp. (NYSE: CY), among others.

  • A Headcount source says heads continue to roll at Cenix Inc., a startup whose backers include Kleiner Perkins Caufield & Byers, Cisco Systems Inc. (Nasdaq: CSCO), and Optical Capital Group. The source says the company has cut another 20 people from its payroll, making that about 58 jobs cut in the past month or so. Cenix is also rumored to be shutting down its Irvine, Calif., product development center, a 15,000 square foot building it opened in December 2000. Cenix representatives did not return calls, but the company's Website still claims Cenix has "more than 100 employees" throughout its various locations.

  • Luminous Networks Inc. says it has shortened its lineup again. The company has endured three layoffs in the last 12 months, and its last given headcount was 175 (see Luminous Cuts Away). Interestingly, though, the company also says it plans to double its staff in China over the next 90 days. Luminous says it has an office in Shanghai with a demonstration lab, and it plans to open a second office in Beijing early next year.

    How many will it have once the staff in China doubles? Luminous won't say.

    "The company is at a point in terms of product development that it has the flexibility to make reductions in certain areas and redeploy resources in other areas," says John Hamburger (no relation to you know who), who previously served as Luminous' director of marketing communications but now works as a part-time consultant to the company.

  • Headcount sees that Matthew Bross, once the wheeling, dealing senior VP at Williams Communications [now WilTel Communications Group Inc. (OTC: WTELV)], is now the chief technology officer at British Telecommunications plc (BT) (NYSE: BTY; London: BTA). BT announced Bross' appointment about a month ago. Bross is best known for using his position as chief technology officer at Williams to make a killing by taking large stakes in startups with which Williams was doing business (see Williams' CTO Profits From His Position and Bross Rides the ONI Gravy Train).

    Here's a summary of other industry appointments (and disappointments) from the past several days:

  • Marconi Plans Further Cuts
  • Marconi Announces New Board
  • Nortel Adds Another Enterprise Chief
  • Chip Express Adds to Board
  • Micromuse CEO Leaves for Motorola
  • Sprint to Slash 2,100 Jobs
  • Charter Starts Restructuring
  • Overture Adds to Board
  • Tyco Adds to Board That's all for this week. If we missed anything, send a tip to [email protected].

    While Headcount will not take itself off the Internet (as so desired by Corona's Patti), we do acknowledge the need for a vacation. Wonder what Mississippi is like this time of year?

    — Phil Harvey and Marguerite Reardon, Senior Editors, Light Reading
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    BlueWater66 12/4/2012 | 9:10:36 PM
    re: Headcount: Mississippi Spurning Anyone know who purchased Alvesta? It is a small industry, so it won't take long to find out. Obvious candidates are Intel and Cypress. Maybe OCP is continuing to consolidate (why pass up a couple bargins in a row).
    photonsu 12/4/2012 | 9:10:35 PM
    re: Headcount: Mississippi Spurning FNSR maybe?
    MrLight 12/4/2012 | 9:10:32 PM
    re: Headcount: Mississippi Spurning BlueWater 66 - I'm sure at some point an announcement will be forthcoming on who "Alvesta Inc. has sold its assets, intellectual property, and inventory to". I can guess but I won't.

    Alvesta had some some reasonably mature four-channel VCSEL based products, as seen with the interopratbility demonstrations that they advertised with - AMCC, BitBlitz, Broadcom, Cypress, Maxim, Mellanox Technologies, Mindspeed, Primarion, PMC-Sierra, Redswitch, Texas Instruments , Velio and Vitesse.

    As Alvesta stated on their web page "Alvesta's four channel QuadLink architecture has been approved as a standard for optical transport for 10-gigabit Fibre Channel (1200-M5-SN4P-I), 10-gigabit InfiniBand (IB-4X-SX), and as a Very-Short Reach OC-192 Physical Media Device by the Optical Internetworking Forum (OIF-VSR4-03.0). Additionally, QuadLink devices are fully compatible with the 10-gigabit Ethernet XAUI electrical specification, which enables direct optical extension of XAUI signals without additional multiplexing." Pretty impressive.

    So it will be interesting to see where the technology lands. As some people may re-call, at one point back in May of 2001, BrighLink Networks had selected the Alvesta's Model 3100 10-Gbps Optical Transceiver for very short reach optical applications in their BOSS 1000 optical switch. Maybe if Brightlink had not "faded" http://www.lightreading.com/do... things would have been probably different.

    Now, to end on a different note, in my past look at VSCEL companies in general, I can across a "VCSEL company directory" web page at http://pier.ch/vcselcompanies.... , maintained by Harald Pier that some of you might find informative.

    MrLight :-)
    BlueWater66 12/4/2012 | 9:10:31 PM
    re: Headcount: Mississippi Spurning Thanks MrLight.

    Based on the lengthy promotional response, you MUST work for Alvesta :-) Hopefully you were able to keep a position with the new company. Stripped down Asset Sales are painful. We're in a nasty market right now.

    Upside_again 12/4/2012 | 9:10:28 PM
    re: Headcount: Mississippi Spurning Beating up the Corona assistant for not
    taking your requests for headcount dirt was great..(on her part!).

    Although the company has bald headed executive bafoons, there is no reason to tattle on her after she she told you to go stuff it.

    MrLight 12/4/2012 | 9:10:26 PM
    re: Headcount: Mississippi Spurning BlueWater66, No, I don't work for Alvesta. They are just one of many VSCEL based component suppliers I have looked at for VSR 10Gbps optics, no more.

    I agree these things are painful, and real people, with real families are affected, but consolidation via asset sales is a fact of life in this business these days.

    I find it important though, to at least mention when it is applicable, such as in this case, that the company's technology was good, but unfortunately that is only one of the ANDed variables in the success equation of a startup. The people who worked on that technology should at least hear that.

    MrLight ;-) Doesn't work for Alvesta.
    xyz 12/4/2012 | 9:10:24 PM
    re: Headcount: Mississippi Spurning Upside_down writes..

    Beating up the Corona assistant for not
    taking your requests for headcount dirt was great..(on her part!).

    Although the company has bald headed executive bafoons, there is no reason to tattle on her after she she told you to go stuff it.


    Lightreading gets into crybaby mode saying the admin probably screens VCs. What a stupid comment ! She is absolutely correct.
    DCITDave 12/4/2012 | 9:10:24 PM
    re: Headcount: Mississippi Spurning re: "Beating up the Corona assistant for not
    taking your requests for headcount dirt was great..(on her part!)"

    We didn't beat anyone up. She called us, said she was speaking for the company, and we quoted her. I'm assuming that's what the company wanted.

    re: "Lightreading gets into crybaby mode saying the admin probably screens VCs."

    Not in crybaby mode. We were just making it clear that we attempted to gain access to an executive officer in the company, but weren't able to. Again, that's probably what the company wanted.
    puddnhead_wilson 12/4/2012 | 9:10:22 PM
    re: Headcount: Mississippi Spurning I don't think that it was too far out of line for LR to quote her exact response.

    On the other hand, I do think that revealing that they received this kind of response from her does reflect a little bit badly on LR as well as her/them, & not just totally on Corona, despite Phil Harvey & LR's clear belief that eliciting this response is a feather in their cap. The more people/corporations that are revealed publicly to believe LR is biased and unprofessional, the harder it becomes to write that opinion off. I'm not sayig this makes LR less useful, it doesn't, it's kind of neat to have a source besides private correspondence & personal experience to get this kind of angle on what's going on. I am just saying that I am taking everything editorial in LR with a more frequent grain of salt than I may have in the past, the information/quotes presented are great, but the conclusions & implications LR draws I can often take or leave.

    Just my opinion.
    DCITDave 12/4/2012 | 9:10:21 PM
    re: Headcount: Mississippi Spurning re: "I do think that revealing that they received this kind of response from her does reflect a little bit badly on LR as well as her/them, & not just totally on Corona, despite Phil Harvey & LR's clear belief that eliciting this response is a feather in their cap."

    Feather in my cap? As in, a reward? I don't think so. We just wanted to show that (1) something's up and (2) we tried to tell you what. We fell a little short, but we'll keep trying.

    Anyway, I'm glad you still find LR useful. I hope we'll continue to be useful to you in the future.
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