Optical/IP Networks

Laid Off, and Leaving Telecom

Rex Gill, 43, had worked in the telecom industry for nearly 17 years when he was laid off from his systems engineering job at Lucent Technologies Inc. (NYSE: LU) in February 2001. After six months of sending out hundreds of resumes and interviewing all over the midwestern and eastern United States, Gill decided to give up on telecom and start his own business, as a Snap-On Tools salesman.

“I had to work. I had to do something,” he says.

Gill, like many in the troubled telecommunications industry, has been forced to take a job in another industry just to make ends meet. And he isn’t alone. While no statistics are available to gauge just how many people have left telecom, recruiters in the field say they’ve seen many frustrated candidates leave the business for more stable industries.

According to Federal Reserve chairman Alan Greenspan, as well as the Labor Department, the U.S. economy seems to be near a recovery. Unemployment insurance claims fell last week by 10,000 to 388,000, while the official unemployment rate dropped 0.2 percent to 5.8 percent in May 2002, suggesting that the pace of layoffs may be stabilizing.

But don't tell that to those who work in the telecom industry.

In telecom, there has been little or no recovery, and it will likely continue that way. First, there's the accounting scandal at WorldCom Inc. (Nasdaq: WCOME) (see WorldCom Who? and WorldCom Goes Boom). In addition, overcapacity and deteriorating earnings have battered many public companies in the sector. Even many of the bankruptcies, necessary to streamline the industry, remain unresolved.

According to the U.S. Department of Labor, the average American may now have three to six different careers in a lifetime. A new survey from human resources consulting firm DBM (formerly Drake Beam Morin) found that 72 percent of people out of work end up in new industries.

Gill says he was too discouraged to continue looking in the telecom sector. He had come to Lucent via the Ascend acquisition in 1999. He worked for Lucent in the St. Louis office, providing systems support to the sales force on ATM and Frame Relay switching equipment, until he was laid off as part of a massive cutback in February 2001. Ten of the 12 people working in his department lost their jobs during that layoff. Since then, Lucent has announced several more layoffs, and even sent out pink slips this week, according to several sources. Gill, who had earned as much as $200,000 a year in salary and commission, was forced to support his wife and two children on a $200 weekly unemployment check.

After months of struggling to find a job in his field, he moved his family back to central Pennsylvania, where he bought a Snap-On Tools franchise and began selling hand-tools to automotive mechanics. Even though he is earning close to 40 percent less than what he had made with Lucent, Gill says he would not go back to telecom right now.

“It was really tough,” he says. “Nobody should have to go through what I did. I’m not making anywhere near the same money as I was before, but I’ve got stability and that’s important, especially with kids.”

Startups have laid off a tremendous number of people as well, and those workers are also struggling. Rich DeSabritus, a 33-year-old project manager formerly with Native Networks Ltd., was out of work for seven months after he was laid off last October. While at home, he took care of his five-month-old daughter, while his wife went back to work. He finally started a new job with a computer manufacturer in New Jersey two weeks ago. Although the time he spent with his daughter was rewarding, he said his self-esteem suffered during those months from the constant rejection. After sending out more than 300 resumes, DeSabritus said he only received a handful of interviews and often faced human resource screeners who were rude when he showed up.

“Being a first-time father I barely knew how to put a diaper on, but then to get the constant rejection was psychologically damaging.”

Other people have left the industry, because they don’t feel that the companies left are stable. Tom Weadock, 47 and the father of two college students, worked for Tenor Networks Inc. in sales. He was laid off in May of 2001 and was out of work until October of last year when he finally decided to take a job outside the industry.

Weadock, who had been in the industry since 1977 working for large networking companies like Bay Networks and Nortel Networks Corp. (NYSE/Toronto: NT), said that he had plenty of offers from small companies like ONI Systems Inc. -- now part of Ciena Corp. (Nasdaq: CIEN)) -- Riverstone Networks Inc. (Nasdaq: RSTN), and WaveSmith Networks Inc. But he felt at the time that the telecom sector would continue to deteriorate and that these small companies would not fare well under the pressure. Judging from their share prices right now, his prediction was accurate. Ciena is trading at $4.22, and Riverstone is now at $2.84 per share.

“I wanted to stay in the industry, and I would have, but I couldn’t find any companies that I thought were stable enough to make it through,” he says. “They all could have the best products on the market, but the whole industry is so bad right now, it probably won’t matter much.”

Through a family connection, he landed a job with a medical staffing company, where he is now vice president of sales. Weadock was able to negotiate the same salary he had been earning at his previous job and said he has been doing well for himself. But he misses telecom.

“Would I go back?” he ponders. “Sure, if the right opportunity came along. But I don’t see that happening anytime soon.”

— Marguerite Reardon, Senior Editor, Light Reading
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colin.evans 12/5/2012 | 12:18:49 AM
re: Laid Off, and Leaving Telecom Please note that "Rich DeSabritus" has never been an employee of Native Networks, nor does he have any association with our company.
Colin Evans
Director - Marketing & Business Development
Native Networks
switchrus 12/4/2012 | 10:11:36 PM
re: Laid Off, and Leaving Telecom GÇ£Gill, who had earned as much as $200,000 a year in salary and commission, was forced to support his wife and two children on a $200 weekly unemployment check.GÇ¥

With all due respect to Gill who lost his job, itGÇÖs very hard to garner much sympathy with Joe Six Pack about job losses in an industry that paid so few people so well.

If someone has an account on one of the big research sites, it would be really interesting to see Labor department statistics on what the total hit to employment in the industry has been. From well paid folks like Gil to technicians and production staff making more modest salaries.
brahmos 12/4/2012 | 10:11:36 PM
re: Laid Off, and Leaving Telecom is it true

gotham is all closed now ?

riverdelta (tewksbury,MA) which was acquired by
motorola had a big rif?
jgh 12/4/2012 | 10:11:35 PM
re: Laid Off, and Leaving Telecom Not that anyone should be surprised, but Nortel is cutting its field SE force by 50%. By end of July, there will be approximately 40,000 employess left. that means over 60,000 gone since 2001 looking for jobs. How would you like to be the Lucent and Nortel sales teams supporting Worldcom, Qwest, Global Crossing, etc.
Good luck to everyone!!!
flashhog 12/4/2012 | 10:11:35 PM
re: Laid Off, and Leaving Telecom Yes. Gotham is gone. Rumor mill has it that Appian had layoff yesterday. And i heard Lucent laid off another 5K with the Westford site hit hard.
Who is next? I know QB it bearly treading water.
whats the story with Coriolis, Photonex, Quarry, Integral Access???? Anybody know when/if these guys will kick the bucket?
Fortunecookie 12/4/2012 | 10:11:35 PM
re: Laid Off, and Leaving Telecom but I gave little sympathy to Gill. He should not make $200,000 in the first place anyway. Market is just correcting itself.
Harley 12/4/2012 | 10:11:33 PM
re: Laid Off, and Leaving Telecom I saw a stat today indicating the total was 318,000 jobs, with a possiblity of 100,000 additional.
Ringed? 12/4/2012 | 10:11:31 PM
re: Laid Off, and Leaving Telecom Fourtunecookie,

You can't just look at salary amounts and make blind assumptions. I worked with Rex at Ascend. He came over from the Cascade acquisition. Ascend had plenty of sales and thus revenue. It was in the right spot at the right time. Ascend went from $149 million in sales to over $1.2 billion in the 4 years I worked there. There wasn't a Sr. SE I knew that didn't make $200K a year with salary and commission in 1999 depending on the territory.

Then came the Lucent acquisition, which over paid badly for Ascend. A record setting $24 billion for 3K people. Nearly all are of these folks are gone, a ton laid off.

The problem isn't salary paid to individuals. It is simply Vendor Financing coupled with M&A that has led to this ultimate collapse.

If you will look at all Service Providers and established equipment vendors who are failing or have failed you will see the same set of traits that have led to their demise. Vendor Financing, Over payment and the constant M&A's racked up a pile of debt so large a company (even in a good year) could not make enough revenue to repay the interest on their debt. For the Service providers it was the rush into 200 markets before you made money in a handful on Tier 1 cities.

AT&T, WCOM, Qwest, JDSU, The whole 3G wireless sector, LU, NT, Marconi, Ciena, RBAK, Global Crossing, XO, Covad, Rhythms, North Point, McCloud the list goes on and on. It would be nice to see the M&A total from these few. For example, AT&T paid $100 billion acquiring cable plants only to sell the lot for $60 billion to Comcast.

Ascend at least did three things right. They never over paid on any acquisition, they paid the employees extremely well (noted several times in the Wall St. Journal) with salary and stock, and Sr. Management knew when to sell out.

BTW, LU troubles we're already in motion as they acquired and overpaid for nearly 30 companies. Ascend just happened to be the biggest. Last but not least Cisco had their part to play in all this to.

I wish the best to all Telecom workers. We are in the fight of our lives.

trixie 12/4/2012 | 10:11:30 PM
re: Laid Off, and Leaving Telecom I saw a stat today indicating the total was 318,000 jobs, with a possiblity of 100,000 additional


Much bigger than that:


And this does not include the likes of Gotham, Sycamore, and of course Worldcom's new contribution.....
Harley 12/4/2012 | 10:11:30 PM
re: Laid Off, and Leaving Telecom If you look at a breakdown of Rex's salary, a portion of it was commission.

Being a Product Manager, I have a keen idea of business and how it runs. Trust me, Rex's commission was disproportionate to what Ascend/Lucent's revenue from the sale was. people who work on commission also put some of their salary "at risk" or on the table. That is, they are paid LESS than every one else until they meet their quotas.

The quotas may be BS, but not everyone is cut out for that kind of work.

Just an FYI, I was interviewed for this article, and some of the facts were incorrect. In any event, I thought I was paid a lot, but not nearly as much as I could have been. With the market as bad as it is, take it for all its got and run. Good for Rex!
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