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Lucent Faces "Exodus of Nexabit Staff"

Light Reading
News Analysis
Light Reading
7/18/2000

Lucent Technologies Inc. could be in for nasty surprise in the next few days as staff that came on board when it acquired Nexabit Networks, a terabit router startup, quit to rejoin their old mentor, Mukesh Chatter.

Chatter has already left Lucent and has set up new startup, Axiowave Networks Inc., across the street from Lucent. And as of today - the anniversary of the July 19th 1999 completion of the Nexabit acquisition - many of Chatter’s former staff will have the financial freedom to follow him.

“On the one year anniversary of the merger, everyone [from Nexabit] gets one year’s acceleration on their options,” says a former Lucent executive. “Next week you’ll see a mass exodus from Nexabit. Many of them will probably end up at Mukesh’s new company.”

Lucent has had a tough time fitting Nexabit’s IP solutions into its ATM-centric product line, suggesting many of its employees may be more than ready to jump ship. “Mukesh had a problem with Curt Sanford [president of the Lucent internetworking systems group] who was running around saying ATM is great and IP is awful,” says the ex-Lucent exec. Previously, Sanford was executive vice president and general manager at Ascend Communications Inc., an ATM powerhouse.

So what’s Axiowave working on? Officially, the company is in stealth mode. So last week Light Reading sent two editors to pay an unannounced visit on the company’s new headquarters in Marlborough, Mass. They were met by an ebullient Chatter, but he would only say that the company is developing a product “for the core of the Internet.”

However, Chatter did agree to give Light Reading a quick tour of the facility. Like Axiowave’s Web site, it’s still under construction. While there was sufficient floor space for a couple of hundred staff, only a handful of Axiowave employees were in evidence.

That could change in the coming days. Lucent employees who make the switch would not have far to go. Industry scuttlebutt has it that some Lucent engineers have already visited Axiowave’s offices – to take advantage of their shower facilities after playing sports. Lucent is rumored to have subsequently built its own showers in order to discourage the fraternization.

This latest twist in the Nexabit saga will be a painful one for Lucent, which desperately needs a Terabit router to compete with Cisco Systems Inc. “It’s not a pretty story. And it could get uglier,” comments Jeff McCarthy, general partner at North Bridge Venture Partners. McCarthy isn’t writing Lucent off, however. “They’ve lost a little of their mojo, but it will be a long time before they go away.”

Lucent did not return calls.

—Stephen Saunders, US Editor, Light Reading, (http://www.lightreading.com)

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