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Optical/IP

Layoffs Top 90,000

A total of more than 90,000 people have been laid off as a result of the bubble bursting in the optical networking industry, according to a survey conducted by Light Reading.

The results, published today (see Grim Reaping: A Downturn Tally), make grim reading. Among the 40 public companies represented in the Light Reading Index, 24 have undergone workforce reductions this year. The total body count comes to more than 84,000 people, and is continuing to increase.

Somewhat symbolically, the company that was riding highest last year -- Nortel Networks Corp. (NYSE/Toronto: NT) -- has taken the biggest fall. Its layoff total of 30,000 is three times bigger than the next company on Light Reading's list, Lucent Technologies Inc. (NYSE: LU)

In terms of percentages of total workforces, however, components manufacturers have come off considerably worse. Avanex Corp. (Nasdaq: AVNX) has shed 56 percent of its staff, and New Focus Inc. (Nasdaq: NUFO) has shed 43 percent.

Among startups, the companies that have made the deepest cuts in staff numbers include:

  • Tachion Networks, which has shed 37 percent of its staff, 169 people;
  • Valiant Networks Inc., 30 percent of its staff, 41 people;
  • WaveSplitter Technologies Inc., 26 percent of its staff, 83 people;
  • Alidian Networks Inc., 25 percent of its staff, 55 people.

    — Peter Heywood, Founding Editor, Light Reading
    http://www.lightreading.com
  • optijerk 12/4/2012 | 8:04:08 PM
    re: Layoffs Top 90,000 Gotham is next. Laying off 33% today.

    Tiburon and convergent laid off last week.
    RobertGerres 12/4/2012 | 8:04:24 PM
    re: Layoffs Top 90,000 Zaffire is close to market.

    Centerpoint is not.

    So looks like Zaffire team will be more or less intact.

    Centerpoint employees? Who knows?
    JEL 12/4/2012 | 8:04:34 PM
    re: Layoffs Top 90,000 Executive recruiter looking for a senior level operations pro in the optical networking space. VP of Operations in Dallas with a well-funded startup.
    GR 12/4/2012 | 8:04:41 PM
    re: Layoffs Top 90,000 Sorry, can't give more information.
    If you are interested, please send
    email to [email protected] We can
    definetely talk more.

    thanks
    GR
    cfaller 12/4/2012 | 8:04:45 PM
    re: Layoffs Top 90,000 lightmaster & saint:

    It's hard to imagine anyone getting $500+ million in additional funding in this market. In Cogent's case, it's unfathomable- Cogent has already racked up several billion in debt, and the business plan was insane even before the bubble burst! Can anyone say Winstar?
    lightmaster 12/4/2012 | 8:04:49 PM
    re: Layoffs Top 90,000 Saint,

    All of the BLECs have (had) a business model that assumed they could go back to the market for more capital forever. At the rate that Cogent is spending money to build infrastructure, it will take many years for them to turn cash positive and who knows how long to ever generate a positive return. However, that was always the plan. More than likely they had planned to IPO to generate cash by now.

    The issue now is: can they convice the capital market that they will every make money and therefore deserve to be given another half a billion to billion dollars of funding to complete their little experiment.

    On the other hand, they are Cisco's poster child for "IP+Optical", so maybe Cisco will keep them afloat.
    saint 12/4/2012 | 8:04:51 PM
    re: Layoffs Top 90,000 I'm trying to figure out how long Cogent Communications will stay around. After researching their business I don't see how they can maintain the burn rate.
    Any comments?
    lighthearted 12/4/2012 | 8:04:51 PM
    re: Layoffs Top 90,000 I hear that they shut down San Francisco operations? Could be a viscious rumor, but offices were cleaned out and items places in boxes...
    saint 12/4/2012 | 8:04:52 PM
    re: Layoffs Top 90,000 What type of network are you building ?
    flatpik 12/4/2012 | 8:04:55 PM
    re: Layoffs Top 90,000 Hah good luck!

    flatpik
    GR 12/4/2012 | 8:05:03 PM
    re: Layoffs Top 90,000 San Jose, CA
    MA Headhunter 12/4/2012 | 8:05:04 PM
    re: Layoffs Top 90,000 Where? MA H
    GR 12/4/2012 | 8:05:08 PM
    re: Layoffs Top 90,000
    Early stage startup, looking for experienced IP routing protocol software developers.
    Also looking for Network Operators.

    thanks
    lighthearted1 12/4/2012 | 8:05:13 PM
    re: Layoffs Top 90,000 Thanks for your perspectives. Very valid points.
    fk 12/4/2012 | 8:05:18 PM
    re: Layoffs Top 90,000 So why announce GA and not announce either a Lab Trial or a Customer to validate it?

    You may simply want to indicate to prospective customers where you are with respect to the development of the product without revealing competitive information to potential rivals. Additionally, it is possible to be in an advanced stage of BETA or field trials with a carrier that won't allow you to announce the fact. Until a contract is in place, some service providers won't allow you to use their name for what amounts to marketing; it's their goodwill that's on the line.

    GA is a specific milestone in a product's life cycle. I don't see any problem with announcing its achievement, even in the absence of announceable customers. Besides, a company may eschew announcing a customer until there are others to announce along with it in order to obtain maximum impact.
    lighthearted1 12/4/2012 | 8:05:20 PM
    re: Layoffs Top 90,000 I understand your point of view.
    MA Headhunter 12/4/2012 | 8:05:20 PM
    re: Layoffs Top 90,000 I believe that this is up to the company and how much info they would like to let you know. If you are not an employee or customer, why should you know what they have going?

    just my opinion.

    It seems to me that letting the likes of Cisco or the multitude of other start-ups know where your product is getting traction is not beneficial to your business in this tight, more compettive market.

    MA H
    lighthearted1 12/4/2012 | 8:05:21 PM
    re: Layoffs Top 90,000 Allidia,

    I did not think that Coriolis was competing with Wavesmith et. al. I thought they were more of a multiservice optical edge box (ethernet and TDM over SONET) where Wavesmith is more of an edge switch/router (FR/ATM services).
    lighthearted1 12/4/2012 | 8:05:21 PM
    re: Layoffs Top 90,000 MA Headhunter,

    Then what validates "General Availability"?
    Without some third party buy in, it's not substantiated. So why announce GA and not announce either a Lab Trial or a Customer to validate it?
    allidia 12/4/2012 | 8:05:27 PM
    re: Layoffs Top 90,000 I heard the layoffs are a mandate from the investors in order to secure a third round. They need to lower the burn rate and canned sales and marketing folks. I also heard their competitor Wavesmith is having software problems (happens when you have to choose the leftovers or laid offs from a startup and network rich area) and is looking to sell quickly before time passes and trials get delayed. So who is better off? Not Ellacoya. Maybe Lightchip. IMO
    lightmaster 12/4/2012 | 8:05:30 PM
    re: Layoffs Top 90,000 Lighthearted,

    Which general availability do you mean? Take a look at the press releases on their web site:

    October 23, 2000 product announcement "The OptiFlow Network solution will be available by the end of the year."

    January 30, 2001 COMNET announcement: "general availability product is scheduled for April 2001."

    June 1, 2001 announcement: "Coriolis announces general availability of products"

    Look for the next announcement: "OK, now we are REALLY available. No kidding."

    Seriously, everybody plays with GA dates, it's just that most people do a better job of it. The product might very well work, but with most of the BLECs hurting for cash, the mainstream market for packet based transport products may be a few years out. That's how you could conceiveably have a product that is available but no customers.

    Incidentally, that is NOT a good thing. If there is a maket and the product is broken, you can fix the product. If the market is not there, there's not much you can do.


    sbaker 12/4/2012 | 8:05:30 PM
    re: Layoffs Top 90,000 This sound like FJ's own marketing message again.
    Z-insider, could you tell us how much stock option you have issued for yourself ?
    MA Headhunter 12/4/2012 | 8:05:31 PM
    re: Layoffs Top 90,000 It has been a growing trend for companies to avoid releasing partner and trial info. There is nothing gained by releasing this info to the general public, competitors, etc.


    MA headhunter
    lighthearted1 12/4/2012 | 8:05:33 PM
    re: Layoffs Top 90,000 Announcing General Availability without announcing
    a Customer or even a Lab Trial is also somewhat suspect.
    yomama 12/4/2012 | 8:05:34 PM
    re: Layoffs Top 90,000 Well, I'm not suprised, they must be starving for cash...their second round was $20 million last summer, for a total of 28.5 million? and let's see what else..You know it's bad when you have ex-AstralPoint people over there..they landed in shit (AstralPoint) and are hoping to come out a plummer....or the famous snob line "Oh I worked at Cascade" and you did'nt attitude...That'll get'm far...
    chungisking 12/4/2012 | 8:05:35 PM
    re: Layoffs Top 90,000
    My Coriolis sales rep called me today informing me that he was laid off and looking for new work. - Chung
    flashhog 12/4/2012 | 8:05:36 PM
    re: Layoffs Top 90,000 I saw a message stating Coriolis had layoffs on friday. Can anyone confirm or deny that?
    sbaker 12/4/2012 | 8:05:36 PM
    re: Layoffs Top 90,000 It seems zaffire's marketing is in work again. With 500 heads in combined company, how long it
    can last ? It is a dead end again.
    lambdaguy 12/4/2012 | 8:05:36 PM
    re: Layoffs Top 90,000 The company is gone, it never got off the floor.
    the tombstone is IN THE GROUND. P-L-E-A-S-E
    lets move on !!
    ben35bates 12/4/2012 | 8:05:40 PM
    re: Layoffs Top 90,000 Nice work on digging up all the grief in the industry. Pretty spooky stuff. However, I noticed one small mistake. Nortel is the leader in this dismal parade both in absolute numbers (30,000) and percentage of staff (excluding a couple of small startups). It will shed 32 per cent of 94,500 employees, not the 25 per cent reported. Actually, the NT situation is probably even worse. It dumped thousands of contractors, primarily in manufacturing operations but also some professional positions. Unlike Cisco and JDSU, NT doesn't count or reveal these bodies in its statements. Nor does it provide a breakdown by region or location. Anybody out there know how many people got the dump in Raleigh-Durham, Massachusetts, Long Island, Nashville, San Jose region, Richardson, Paignton and Harlow (England), Monkstown (Ireland), Paris, Brampton HQ, Calgary, Montreal or Ottawa? The Ottawa papers are estimating 5,000 to 6,000 cuts there out of pre-cut workforce of 17,000 which excluded a lot of contractors..
    drone387 12/4/2012 | 8:05:41 PM
    re: Layoffs Top 90,000 http://www0.mercurycenter.com/...
    z-insider 12/4/2012 | 8:05:46 PM
    re: Layoffs Top 90,000 Any start-up that has not any cuts need to have its head examined. The top individuals contributors are almost always safe in these cuts on both sides. Obviously there will be further cuts when you combine two companies. Zaffire was one of the first companies to engage in cuts, and obviously was crucified on LR for doing such. Did reducing 15 sales personel back in January seem like such a bad business move now? This was the first move by JF. He was leading the company in the right direction, but did not have enough time/money.

    The real problem with Zaffire was the original management team lead by TL tried to build a god-box(Z5000). TDM, MPLS, packets etc. Other Zaffire insiders know who wanted to provide a simple transport system, versus who wanted to rule the universe with a god-box(ruling the universe people are no longer there). By time management team was changed it was too late. BBO and FiberStreet, the first two customers going bankrupt was extremely distruptive, just as deployments were scheduled to start.
    FLAG provided a real focus on simply delivering a very high capacity OC-192 enabled DWDM system. With three large cities turning up service in less than a month, time will tell if the product works. I'm sure it will show up here if anything goes wrong in the deployment or subsequent service.

    In terms of product complexity, ONI showed you can build a solid company out of simple and effective metro DWDM. Zaffire now has such a system but is far far behind in customers, twenty to one. Centerpoint brings a element that ONI can never get. Combining the two gives a chance to compete in the future. In company meeting Centerpoint showed lots and lots of cash still available. Should last a least 20 months. Still a long way to go...

    Z-insider
    Dredgie 12/4/2012 | 8:05:48 PM
    re: Layoffs Top 90,000 You missed one:

    - Critics with no linguistic skill(s)
    juan 12/4/2012 | 8:05:50 PM
    re: Layoffs Top 90,000 Why do you think employee in the centerpoint should worry ? Centerpoint engineering team
    is much more stronger than zaffire.

    Based on the information at light reading, it is clear that Zaffire has a lots of overhead also. For a simple product like Z3000, why do you think it need 150 employee ? Because lots of them are
    friends and family of zaffire's manager. They want
    their budd to get rich quick also.

    It is rumored that Zaffire has following asset.

    - the executives with lie skill
    - managers with ass-kiss skill
    - architectors with b.s. skill
    - engineers with political skill.

    All those people should be let go in big time.
    lighthearted1 12/4/2012 | 8:05:51 PM
    re: Layoffs Top 90,000 Word is Coriolis had layoffs today.
    cgadgil 12/4/2012 | 8:05:54 PM
    re: Layoffs Top 90,000 After Centerpoint's acquisition of Zaffire, there a bound to be heavy redundancies, especially considering that the maturity levels of Zaffire products is much higher.

    If I were working at Centerpoint, I would start looking.
    surveyor 12/4/2012 | 8:05:55 PM
    re: Layoffs Top 90,000 In addition to the obvious overindulgences resulting in reductions, there are boards in the industry that are: 1] looking at this as an opportunity to "clear some space" to save some dough, and at any other time they would receive negative headlines; this is an opportunity to skinny down their headcount, cut cashflow, in a "everybody's doing it" environment; 2] looking to force layoffs because it must be the "right thing to do", everybody's doing it.
    spanky 12/4/2012 | 8:06:01 PM
    re: Layoffs Top 90,000 Don't be surprised if you get lais off is what I think they are saying!!! ;-)
    johnjohn 12/4/2012 | 8:06:01 PM
    re: Layoffs Top 90,000 The summary of the article said that you would offer advice to people affected by the layoffs.

    Where is it?
    billy_fold 12/4/2012 | 8:06:05 PM
    re: Layoffs Top 90,000 Hey, LightReading, get a clue. Tachion went out of business July 3 and laid everyone off.
    kp9988 12/4/2012 | 8:06:06 PM
    re: Layoffs Top 90,000 If every one posts message like you do -- repeat one sentence four times, job openings will be many many more.
    drone387 12/4/2012 | 8:06:07 PM
    re: Layoffs Top 90,000 The Dead - Point Reyes, Mayan, Tachion
    The Distressed Sales - Zaffire
    The Wounded - Jasmine, Empowertel

    An interesting comparison would be a table with pre-bubble, post-bubble employee counts, and percentage change of the top 11.

    spore 12/4/2012 | 8:06:08 PM
    re: Layoffs Top 90,000 If there are any openings in marketing communications, I would be most interested.

    spore
    spore 12/4/2012 | 8:06:08 PM
    re: Layoffs Top 90,000 If there are any openings in marketing communications, I would be most interested.

    spore
    spore 12/4/2012 | 8:06:09 PM
    re: Layoffs Top 90,000 If there are any openings in marketing communications, I would be most interested.

    spore
    spore 12/4/2012 | 8:06:09 PM
    re: Layoffs Top 90,000 If there are any openings in marketing communications, I would be most interested.

    spore
    tom 12/4/2012 | 8:06:11 PM
    re: Layoffs Top 90,000 if your interested there are excellent opportunities available, let me know if interested

    TR
    spectre 12/4/2012 | 8:06:11 PM
    re: Layoffs Top 90,000 Kestrel had two rounds of layoffs within one month's time. The first layoff was about 70 people at the end of May, and the second round of layoffs in late June were close to 100 people. Why isn't this mentioned?
    ivehadit 12/4/2012 | 8:06:12 PM
    re: Layoffs Top 90,000 lucent has announced:
    10K initially (supposedly done)
    8.5K with the retirement package
    another 10K going soon
    6K expected to go with fiber business
    untold number going with sale of plants
    some 20K went with agere

    its typical lucent. piecemeal, but a lot of change. the company projects to be at around 60K by end of year, just like nortel.
    Belzebutt 12/4/2012 | 8:06:13 PM
    re: Layoffs Top 90,000 In Lucent's case, I really don't see how they can get away with "only" 10,000 layoffs, since they have more staff than Nortel, less revenues, and they're bleeding from every orifice. If they don't announce a lot more layoffs...
    lo_mein_noodles 12/4/2012 | 8:06:13 PM
    re: Layoffs Top 90,000 cmon noitall...out with it. Ya can't leave it at that..would that be an internal thermal nuclear weapon or an external ballistic missile??? change your name to dotellitall..and let it slip.:-)
    brichter 12/4/2012 | 8:06:15 PM
    re: Layoffs Top 90,000 Of course not. Straight out the side of his neck.
    lighthearted 12/4/2012 | 8:06:16 PM
    re: Layoffs Top 90,000 care to be more specific?
    noitall 12/4/2012 | 8:06:16 PM
    re: Layoffs Top 90,000 downsizing, that is ;-)

    the sp business at cisco is about to get a nuclear bomb dropped on it...
    jimmy 12/4/2012 | 8:06:17 PM
    re: Layoffs Top 90,000 The following is from FT.com;

    John Roth claims "....optical backbone products, hardest hit by the downturn, would take an "extended investment holiday"." If I were a customer, I would be concerned about feature rollout....I just don't understand why he would say this....please stop the assult...the troops are demoralized enough!!!!!!!!!!!!!!


    Times have changed for Nortel's former hero
    FT.com site; Jun 21, 2001
    BY SCOTT MORRISON IN TORONTO


    It can't be easy being John Roth these days.
    A triumphant hero in Canada until early this year, the chief executive of Nortel Networks is now seen as one of the top corporate villians in the country's history.
    No one can blame Mr Roth for the collapse this year of the market for fibre-optic networks. The dramatic plunge in sales has sent Nortel - and its rivals - scrambling to adjust to the worst downturn Mr Roth has seen during his 30 years in the industry.
    He has been criticised by analysts and investors for not seeing - and reacting - to the downturn earlier than he did. He argues that demand from carrier customers prompted him to continue adding capacity right up to the end of 2000, even as the industry outlook quietly began to take a turn for the worse.
    But Mr Roth clearly isn't in the mood to discuss the past. He is much more interested in selling his company's restructuring plan, one that involves cutting 30,000 jobs, quitting non-core business lines, taking massive write-downs, and even halting dividend payments.
    The idea is to downsize Nortel by about one third, so that the company can operate on US$5bn in quarterly revenues, or about US$20bn a year. "When we mention US$5bn, we don't just want to break even. We want to make a good profit at that level," he says.
    But Mr Roth is quick to acknowledge that the US$20bn level is a "best guess" estimate given that his company cannot accurately predict when customers will start buying and how much they will buy once they start reinvesting in telecoms systems.
    "If it turns out that US$5bn is too high then we'll have to cut deeper," he says. "We are really looking forward to telling our organisation we are at the right size."
    Nortel has already said it would shut down its broadband and narrowband access units and many observers have said the next to go will be the group's customer relationship management software unit, its enterprise division and even its optical component manufacturing operations.
    Mr Roth would not address such speculation, but he did argue that it would be prohibitively expensive to build a direct sales organisation to market enterprise products in order to compete with Cisco, which dominates that market.
    And he appeared to rule out the sale of Nortel's optical components business, at least for now. The company has talked about spinning out a minority stake of the unit, so that it could maintain control to ensure it had reliable supplies.
    That issue is no longer as important as it was when Nortel and its rivals couldn't make equipment fast enough to keep up with demand. "As time goes on, control [of our optical unit] is less and less important. But it is not clear we are willing to surrender control today," he says.
    But even as it cuts, Nortel cannot afford to sacrifice its potential to meet demand once customers return to the market. Mr Roth says he is personally overseeing "eight well defined R&D projects" he considers crucial to the future of the company.
    He declines to identify these but says they are spread across the company's core product areas, including wireless infrastructure and internet protocol capability. He says optical backbone products, hardest hit by the downturn, would take an "extended investment holiday".
    The company's other priority is to find a successor to Mr Roth, who initially planned to retire at the annual meeting earlier this year. That came to nothing after heir apparent Clarence Chandron stepped down for medical reasons. Mr Roth, who is now slated to retire next April, is reluctant to discuss the circumstances surrounding Mr Chandron's resignation other than to say: "It didn't work out."
    Mr Roth downplays the "vision" thing, noting that the significant technological discontinuity in the industry - the shift from circuit switching to packet switching - is already well underway. "This is not a matter of big strategy. It's about execution and getting it done," he says.



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