Shakeout? No Worries

Most optical networking professionals are expecting a big shakeout this year, but most don’t think it will affect them personally, according to the March Light Work poll, Shakeout: Worried?.

Close to 900 people responded to the poll. 43 percent of them expect half of today’s startups to disappear within a year. Another 30 percent think about a quarter will go to the wall.

That’s hardly surprising in view of all the gloomy news. Public companies like Cisco Systems Inc. (Nasdaq: CSCO), Nortel Networks Corp. (NYSE/Toronto: NT), JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU), and Redback Networks Inc. (Nasdaq: RBAK) are laying off staff. So are startups like Mayan Networks Inc., Zaffire Inc., and Jasmine Networks.

All the same, there are bright spots, according to the poll. More than a quarter of respondents say their companies will increase staffing levels this year, and another 19 percent say they’ll remain static. A sizeable percentage of respondents, however -- 26 percent -- say their companies will be laying off between 10 and 24 percent of their workforce.

A majority of respondents are optimistic about their own prospects. Forty-five percent say it’s unlikely they will lose their jobs, and 23 percent flat-out say that it won’t happen. Only 22 percent say they think there's a 50-50 chance that they will be cut loose within the year. A mere 2 percent say they’ve already been dumped.

What are folks doing to protect themselves in these uncertain economic times? They are going back to the basics: 32 percent say they have stopped spending extra cash and are now saving; 29 percent say the current situation has made them work even harder. While only 8 percent say they have moved to a job with more security, 16 percent say they are currently looking for such a position. But there is still a significant portion of those surveyed who aren’t worried at all: Nearly a third of those polled say they aren’t doing anything differently now.

Check out this month’s poll already on the Light Work site: Salary Survey. Compare how your salary stacks up against others in the industry, and track the latest trends in compensation.

-- Marguerite Reardon, Senior Editor, Light Reading http://www.lightreading.com

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Rugger 12/4/2012 | 8:36:59 PM
re: Shakeout? No Worries I just took your salary survey and you might consider re-wording the final question. I took it to mean "what was the value of my newly granted stock options at their peak during the last year as a percentage of my salary." Using that definition, they were worth almost 550% of my salary. However, now they are worth nothing. The question could be taken differently by different people and the results won't be accurate.

flashhog 12/4/2012 | 8:36:56 PM
re: Shakeout? No Worries "everyones holding their breath hoping not to see a pink slip"
C'mon! Clearly you are at a less than desirable company. There are plenty of startups out there who are doing just fine. I could name 20 Companies in MA/NH right now that will not be affected by this slow down at all. They have been staffing up hard with great talent. I know this because i am placing the talent there! The cream rises to the top. These companies you see folding have no vision, oh yeah...and NO MONEY. Look at the companies out there getting the funding in a down market. Those are good signs to me. They have a good story, with names who have done it before and they are being backed by top tier VC. This is the time to look around if you want a startup. It is very easy to see who is rising and who is falling. I have to laugh when i read some of these messages. I have my finger on the pulse of the startup market, and it is beating strong! "holding their breath..." maybe you should grab the bull by the horns and move on. just a sugesstion.
why 12/4/2012 | 8:36:55 PM
re: Shakeout? No Worries are likes of scmr,corv, tellium still safe?
Rugger 12/4/2012 | 8:36:55 PM
re: Shakeout? No Worries CORV is still hiring so they must be okay.
flashhog 12/4/2012 | 8:36:54 PM
re: Shakeout? No Worries the problem you have with a company like SCMR is that they hired 300 people since last summer! most of those people came in with option strike prices at 100 and above!! they are now 93 dollars under water! on top of that, they are still busting there asses working "startup" type hours on some of their next gen products. there are peopel leaving now because of that. What is there motivation when they are so far underwater on their options!
flashhog 12/4/2012 | 8:36:54 PM
re: Shakeout? No Worries That is the whole point, a "good idea" is not good enough right now. There are companies out there who are not just building another box that will increase bandwidth like everyone else. they are working on building infrastructure that will/can compliment what many others are doing/building. What you said is true if you are building a stand alone provisioning box. some of those companies that had a good product but went under anyway...well they couldn't have sold water in the dessert. that is why they got no more funding and that is why they folded.
bluey 12/4/2012 | 8:36:53 PM
re: Shakeout? No Worries I'm not currently happy where I am right now, so I was wondering if anyone has any ideas of who are the HOT startups right now. I'm an software dude in the 495 area of MA. I'm looking for a company that could expect a post-acquisition or IPO valuation of around $3 billion. I'd be willing to go down to $2 billion though. I'd be expecting at least .15% of outstanding stock. Ideally they should be funded by Greylock, Matrix, and/or Bessemer VP. I'd prefer a location of either Acton or Boxborough, but I'm flexible. Any ideas?
flashhog 12/4/2012 | 8:36:52 PM
re: Shakeout? No Worries Bluey, it is impossible to predict what a companies valuation will be! however, I am working with Many companies who are backed by those VC as well as some other tier 1 VC's. I would love to speak with you offline. feel free to contact me at [email protected] with any questions.
Steve Saunders 12/4/2012 | 8:36:52 PM
re: Shakeout? No Worries Bluey -- click here and try the search tool.

Good luck.

skeptic 12/4/2012 | 8:36:50 PM
re: Shakeout? No Worries

1. Look for someone with lots of cash in the bank. Stay away from anyone running out of money.
Ask their payroll costs per month and how much money they have in the bank.

2. Look for a startup that is selective about who they hire. People who are looking to staff up with bodies rather than talent are going to have a hard time in six months.

3. The valuation levels you are thinking about are unrealistic until the market turns around. As the stock prices of the buyers drops, what they pay for statups drops almost the same amount.

4. Look for someone who is unique in their product space or has a development lead in their product space. If there are 20 startups working on the same thing, most of them will not survive.

5. Ask yourself if their high-level business plan makes sense. (those of many companies started last year dont).

6. Look for a company where the executives have contacts or experience in the business the company is in. Run away from anything run by dot com refugees.

7. The names of the VC's don't mean as much as they used to. Even people with good reputations threw money all over the place last year. The biggest name VC's are often spread so thin that they don't really give as much attention to companies as they should.

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