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Optical/IP

Headcount: Scary Times Continue

Boo!

Halloween has passed, but the telecom world is as scary as ever. Here's a rundown of last week's hirings and firings, via "Headcount," our new editorial vehicle whose tires are being constantly kicked:

  • The artist formerly known as Williams – WilTel Communications Group Inc. (OTC: WTELV) – has handed the reigns over to a rookie. Jeff Storey succeeds Howard Janzen, who piloted the company to bankruptcy, as WilTel's new CEO and president (see Williams Bolts Out of Bankruptcy ). This is a pivotal moment for WilTel. Storey has never been in the chief's chair before and WilTel is fresh off a Chapter 11 exit with $375 million in funding. So why are Wall Street's yawns so deafening?

  • Alcatel SA (NYSE: ALA; Paris: CGEP:PA) says it will cut about 1,000 positions, or 13 percent of its overall U.S. workforce, by the end of the year.

  • LuxN Inc. has cut some heads recently, bitterly explaining that recent reports of its inroads with SBC Communications Inc. (NYSE: SBC) led to increased competition from Nortel Networks Corp. (NYSE/Toronto: NT) (see Sources: LuxN Close to SBC Deal). "Like any other company in this industry we've had to readjust and cut budgets," says Paul Zalloua, LuxN's VP of marketing.

  • Lynx Photonic Networks now employs 58 workers, down from 75 just a few days ago. The company has "taken the important strategic decision to ensure that the current funding level, in 'worst case scenario' planning, takes Lynx into 2006 and beyond," writes Dick Sadai, the company's former senior VP of business development, in an email note to just about everyone.

    Regrettably, Lynx PR maven Kelly Williams was one of the full-timers cut. Williams was always – well, usually – a good sport when Light Reading picked on Lynx for its hairline, its headlights, or its cracked rear-view.

  • Headcount hears from several sources that Rapid5 Networks Inc. has shut down. It's not clear how many jobs were affected. In August 2001, Rapid5 said its then spanking new digs could accommodate up to 150 employees.

    The company hasn't returned calls yet, but PR guy Matt McGinnis admits he's no longer pulling a paycheck. "I'm not going to be able to comment," McGinnis says. "I have my hands tied." Headcount wonders how he picked up the phone.

  • What in the Wide, Wide World of Sports is going on at Lucent Technologies Inc. (NYSE: LU)? Light Reading has reported that up to 180 jobs may have been snuffed, as the company ditches its TMX 880 business (see Lucent Chops TMX 880). Still, our sources won't stop dropping hints that another shoe is about to drop. Will Cisco Systems Inc. (Nasdaq: CSCO) and Sycamore Networks Inc. (Nasdaq: SCMR) buy a chunk of its ATM unit (see Cisco, Sycamore Circling Lucent's ATM)? Is Lucent's SpringTide product about to wash ashore and die of loneliness? Stay tuned.

  • Several publications have reported that Catena Networks Inc. has cut more employees, this time as many as 50 people. Voila! We have just become one of those publications.

  • Kestrel Solutions Inc. has reached the next chapter in its life story: Chapter 11. The company filed for bankruptcy protection in San Jose on October 21.

  • Finally, is Zhone Technologies Inc. close to acquiring Corona Networks Inc.? Sources say Corona employees are fearing the worst because Zhone's modus operandi is to follow a buy with a big swing of the axe. Zhone won't confirm or deny the rumor, but it wouldn't end a call without exuding some cockiness. "We've done seven acquistions to date," says Zhone marketing VP David Markowitz. "Who will get to be lucky number eight? It's been three months – I think we are probably due for another one."

  • In the telecom world, says one glum PR wag, "things would have to improve dramatically just to suck." Headcount couldn't agree more.

    — Phil Harvey and Marguerite Reardon, Senior Editors, Light Reading
    www.lightreading.com
  • optopuss 12/4/2012 | 9:12:15 PM
    re: Headcount: Scary Times Continue The axe came down on Tropic today. A total of 40 people were let go in R&D.
    MrLight 12/4/2012 | 9:13:22 PM
    re: Headcount: Scary Times Continue lightgrieving your statement" heard Vish Nadal (sp?), the optera metro chief architect, recently left the company (I heard he's at Cisco)" is incorrect.

    He is not at Cisco but in Nortel wireless. And in regards to "optera metro chief architect", check with "Bezlebutt" on this board what Vish's role was. I can't see how Vish was what you say based on the fact that my sources say Vish came from Nortel's voice switching group, Succession (sp?), to OPTera Metro in late spring of 2001, and left a year later or so.

    But either way lightgrieving don't grieve, Nortel has a deep pool of Optical people to draw on to replace him.

    MrLight :-)
    kwheel2003 12/4/2012 | 9:22:32 PM
    re: Headcount: Scary Times Continue DarkWriting,

    A headhunter ?

    Or a CEO ???

    kw
    lightgrieving 12/4/2012 | 9:23:32 PM
    re: Headcount: Scary Times Continue Anyone have any news about layoffs in Nortel's Optera Metro business ?

    I heard Vish Nadal (sp?), the optera metro chief architect, recently left the company (I heard he's at Cisco) - is this a clue to the future ? The last bit of credibility metro had just left with him,

    DarkWriting 12/4/2012 | 9:23:39 PM
    re: Headcount: Scary Times Continue Fleshpeddler,

    There is ABSOLUTELY NOTHING wrong with trimming some dead wood if that is really what is happening. It's the lying that I have a problem with and I'm not even saying that is not expected from corporate executives who have to compete with the other liars out there. All I'm saying is that we all need to understand this so we are not surprised when it happens and that we will have to take on that personna if we expect to join their ranks. Hopefully I have made myself clear this time.

    By the looks of your alias, I would assume you are a headhunter. Given the experiences I have had with headhunters, I would also assume you already know exactly what I am talking about. If you are not a headhunter, my sincerest apologies and congratulations.

    DW
    fleshpeddler 12/4/2012 | 9:23:47 PM
    re: Headcount: Scary Times Continue
    Thank you Mr. Bitter.

    What's wrong with a company trimming some dead wood? From what I can tell these aren't layoffs, but selective removal.
    DarkWriting 12/4/2012 | 9:23:52 PM
    re: Headcount: Scary Times Continue When are you all going to stop being surprised and figure out that these guys are all liars and whores. It is part of the job requirement! That is how business is done in this country no matter what anyone tells you.

    DW
    Bongiorno 12/4/2012 | 9:24:01 PM
    re: Headcount: Scary Times Continue Corning recently announced some plant closures, which IGÇÖve not seen, reported in lightreading
    http://www.corning.com/media_c...
    + heard that JDSU will be closing itGÇÖs plant in Eindhoven, Netherlands and the Modulator facility is down below 70 people.
    Probably old news but Optospeed has shut its Mezzovico, Switzerland facility
    And finally rumours have it that as soon as the Bookham takeover is complete they will announce the intention to shut the Ottawa chip fab
    bluey 12/4/2012 | 9:24:08 PM
    re: Headcount: Scary Times Continue outside: I've heard the same thing about Telica. They let the engineers finish their projects and give 'em the big ol' boot.

    John St. Amand has been absolutely lauded in the local press. He just won Mass High Tech's 2002 All-Star award.

    outsider looking in 12/4/2012 | 9:24:15 PM
    re: Headcount: Scary Times Continue That is old news, real old news. It has all been under the radar screen because it has been one or two at a time. I don't remember the exact quote, but I remember about 6 months ago Mr. St. Amand being quoted in Mass High Tech (I believe) bragging they had been able to avoid the layoffs that were befalling the rest of the industry. The area rags ate it up! The interesting part to the story is that I am a recruiter and on the very day of the article, I was talking with an engineer how had just gotten laid off. He said that as people were finishing their assignments, they were getting laid off. It was happening one or two a week. It was too slow of a drip to be noticed.
    bluey 12/4/2012 | 9:24:16 PM
    re: Headcount: Scary Times Continue Word on the street is that Telica has been quietly laying off engineers in Marlboro, MA. Lightreading might want to sniff around and find out what the story is. They've gotten nothing but great press.
    joke 12/4/2012 | 9:24:16 PM
    re: Headcount: Scary Times Continue TELM is going to have another round of layoff 50%
    joke 12/4/2012 | 9:24:20 PM
    re: Headcount: Scary Times Continue Heard a rumor that Tellium is going to lay off 50% employee. Someone else hear this?
    Flash_Light 12/4/2012 | 9:24:26 PM
    re: Headcount: Scary Times Continue sure........i am offering a penny for a million shares.
    TelCoEngineer 12/4/2012 | 9:24:26 PM
    re: Headcount: Scary Times Continue As far as I know, you can't sell shares (derived from the purchase of vested stock options) in a private company. If I'm wrong, and someone out there is interested in purchasing some shares of Kestrel stock, email me ASAP. ;-)

    ***********

    Depends on the wording of your contract, but almost all of them say that the only place you can sell them is back to the company - at the company's discretion.

    You are the screwee...

    They do need to file appropriate paperwork before the end of the year, though, in order for you to take the loss in 2002. With a private company bankruptcy, this is not a given and can cause some real problems is they don't officially declare the stock to be worthless.

    Check it out before you take the tax loss.
    horse of a different color 12/4/2012 | 9:24:27 PM
    re: Headcount: Scary Times Continue As far as I know, you can't sell shares (derived from the purchase of vested stock options) in a private company. If I'm wrong, and someone out there is interested in purchasing some shares of Kestrel stock, email me ASAP. ;-)

    H
    alexchilton 12/4/2012 | 9:24:27 PM
    re: Headcount: Scary Times Continue You can sell your shares back to Kestrel for their current value, if they are willing.

    Alex.
    Ex-Cenix 12/4/2012 | 9:24:28 PM
    re: Headcount: Scary Times Continue 40% of reduction of work force mostly engineers. Don't know if any more will occur from now until the end of the year.

    Ex-employees
    plumpy 12/4/2012 | 9:24:29 PM
    re: Headcount: Scary Times Continue Calling Zhone management monkeys is an
    insult to all primates.

    Reptile or sediment is probably the
    right species.

    p

    lightFleeting 12/4/2012 | 9:24:32 PM
    re: Headcount: Scary Times Continue You have to sell the shares in order to call it a loss. Your loss will be the difference of your buy/sell. You can then deduct up to $3k/year on your federal tax return.

    Marguerite Reardon 12/4/2012 | 9:24:33 PM
    re: Headcount: Scary Times Continue We're looking for more news on layoffs and notable hires throughout the industry. We're trying to run an update every friday. So if you have heard anything please let us know so we can check it out. Email editors[email protected]

    Thanks!
    techoriginol 12/4/2012 | 9:24:39 PM
    re: Headcount: Scary Times Continue Haven't we heard this song before? Anything to impress the venture capitalists
    that are stupid enough to invest in Zhone. Watch what will happen:
    .
    - The stinkers running Zhone will give the newly acquired employees a pep talk about
    what a future they have with Zhone and how everyone will soon get rich with stock
    options once the company goes IPO.
    - As soon as Zhone legally can they will lay off the bulk of the employees,
    especially the ones that actually contribute to the product line and can keep
    the product developing. Yes the jet setters that do nothing 'cept fly around on private
    jets and occupy empty offices will stay.
    - Zhone will keep a small group of so called core employees so that they can show the
    investors that yes they have all these fabulous access that can take care of all the
    customer needs (remember MALC, NT's Access line etc). All they're doing is creating
    an illusion that they are moving "full steam ahead" when all they really have is a ghost
    ship barely inching along.
    - In reality the only thing that Zhone ends up with are labs full of archaic aging junk
    and no one to support these products or further develop them or for that matter to
    even repair the stuff. Also venture capital disappearing sooooo fast that you couldn't
    flush the money down the john fast enough.
    .
    If you were an investor, customer, enginner or technician would you really wanna deal with
    these monkeys? They develop practically nothing, eat venture capital, fire engineers and developers and pretend to actually know something. Yes they did get real lucky once with their buddies at Lucent.


    sir-wish-pro-wide-her 12/4/2012 | 9:24:43 PM
    re: Headcount: Scary Times Continue what tree did you fall off of? Let me guess. Either you are employed with them, or are an existing investor or have just got a call option on that company or have a friend who works for them that you are trying to help save his/her job.
    Iipoed 12/4/2012 | 9:24:43 PM
    re: Headcount: Scary Times Continue Every analyst is pushing strong sell. What do you know that the rest of the world does not. Hope you did not spend money exercising your options above TELM's current value. AMT = ouch.
    PRMaven 12/4/2012 | 9:24:45 PM
    re: Headcount: Scary Times Continue Phil and LR Staff:
    Thank you for the kind words, but please let me clarify, I was ALWAYS a good sport. Lynx has made some prudent budget decisions that allows them to ride through this wave of an industry recession. However, I am still on contract with Lynx to continue to support their continuing marketing efforts.

    With hard times, comes opportunity. With Lynx as our first client, I have started my own communications consulting business (yet unnamed). Our goal is to help small start-ups, who don't have budgets for full-time staff, have as fun of a relationship with LR, and others, as Lynx continues to enjoy. Services will encompass both marketing communications and public relations.

    I'll be seeing you soon....
    PR Maven
    achorale 12/4/2012 | 9:24:48 PM
    re: Headcount: Scary Times Continue Can you send me some of the stuff you have been smoking?

    i'm putting every free dollar into tellium. it's the safest optical company to be in right now.... still have over $billion in backorders and is #1 in the rapidly growing wavelength grooming switch market!!!! TELM to $10!!!! get in now!
    -twisted
    DarkWriting 12/4/2012 | 9:24:49 PM
    re: Headcount: Scary Times Continue What happened to the posts about Brocade layoffs.

    DW
    bb55 12/4/2012 | 9:24:50 PM
    re: Headcount: Scary Times Continue Does anybody know anything about Ottawa startups like : Tropic, Meriton, Innovance or Ceyba?

    Their funds must be almost drained out now...However no news about layoffs had been heard...They all employ close to 800 people, so they either close to this decission or they are lining out with some business...
    futureisbright 12/4/2012 | 9:24:51 PM
    re: Headcount: Scary Times Continue Judge for yourself!

    they recently severely reduced their headcount; mostly got rid of producing engineers, and kept refugees from Bell Labs in management position. Place looks like an inverted pyramid now.

    they recently bailed out their senior management who went out to buy TELM stock with corporate loans, and got way under water. Enron on a smaller scale.

    They are, allegedly working on a next gen product, since no one is buying their current one.

    They sit at $50M market cap with $200M in cash and virtually no debt. Between ongoing burn rate and management golden parachutes, $50M may be high.

    What's wrong with this picture?
    duedilig 12/4/2012 | 9:24:51 PM
    re: Headcount: Scary Times Continue Your initials wouldn't be JM or maybe BP would they?

    Over a $billion in useless paper you mean!!

    RJC 12/4/2012 | 9:24:52 PM
    re: Headcount: Scary Times Continue You wrote:
    This is a pivotal moment for WilTel. Storey has never been in the chief's chair before and WilTel is fresh off a Chapter 11 exit with $375 million in funding. So why are Wall Street's yawns so deafening?

    Are you serious? Maybe you can't hear much from the street because the investors still remember who got the shaft in the chap11 filing, and they know WCG has changed the name and the CEO, but not a damn thing in the business plan.
    Zen question modified for WCG: What's the sound of one hand giving you the finger?

    rzerockzeron 12/4/2012 | 9:24:54 PM
    re: Headcount: Scary Times Continue Best sarcastic post ever!

    that one deserves a 5...no a 10!

    Congrats. I applaud your post. Keep up the good work.

    RZ.
    twistedcopper 12/4/2012 | 9:24:54 PM
    re: Headcount: Scary Times Continue i'm putting every free dollar into tellium. it's the safest optical company to be in right now.... still have over $billion in backorders and is #1 in the rapidly growing wavelength grooming switch market!!!! TELM to $10!!!! get in now!
    -twisted
    rzerockzeron 12/4/2012 | 9:24:56 PM
    re: Headcount: Scary Times Continue Stick with companies with real revenues...CSCO, NT, LU, JNPR, etc.
    AMngr 12/4/2012 | 9:24:58 PM
    re: Headcount: Scary Times Continue Does anybody have any idea what's going on with TELM? Should I buy some or is the company is dead like so many others? Any insight will be appreciated.
    techstud 12/4/2012 | 9:24:58 PM
    re: Headcount: Scary Times Continue
    That can't be called aquistion as in this case the lead investor has decided to give away the assets of a bankrupt company to Zhone. Corona has no money to pay salary beyond this month. How much you can get for a dead cow these days? the company is making last minute attempt to get a particular company from France to invest some money to get some reprieve from sudden death and forced asset sale to Zhone.
    horse of a different color 12/4/2012 | 9:25:01 PM
    re: Headcount: Scary Times Continue Kestrel files for Chapter 11, huh? Well, no real surprise given the market and a less-than-mainstream product.

    I am a shareholder (and ex-employee) in this company. Can tell me what happens to my stock options at this point? I know that Chapter 11 is supposed to be for "protection" from creditors during a "restructuring period", but this company is only a skeleton of its former self. Is this perhaps a precursor to an acquisition? If a company sells it's IP to another company, what happens to the stock (private company)?

    I guess the real questions is this: At what point can I either get something ($'s or stock options) or write it off as a loss? Do have to wait for an outright aquisition or Chapter 7?

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