Optical/IP Networks

Stealthy Startup Leads With Layoffs

Talk about making an entrance...

When Mukesh Chatter and Ray Stata founded Axiowave Networks Inc. nearly two years ago, they didn’t have much to say. They said their startup's main focus was optical networking, period. And they've pretty much stayed stealthy as can be -- until this week.

But here's a sign o' the times: The first real news to emerge from Axiowave is a layoff. On Monday, the startup handed pink slips to a department of engineers working on the company’s ultra-dense optical crossconnect switch. The news first came over the transom from an optical worker familiar with the move (cozy world, isn't it?).

CEO Chatter confirmed the layoff, but he says the number was "under 30" and that the product they were working on was only one of several DWDM boxes on the company’s roster.

"We saw what Nortel did with Xros," says the indefatigable Chatter, referring to the discontinuance of the Xros product line by Nortel Networks Corp. (NYSE/Toronto: NT) in early March (see Nortel Shuts Optical Switch Effort). "We saw the handwriting on the wall that the market for large-port-count crossconnects isn’t there. We decided to freeze our activity until the market returns."

Not to worry, though. Chatter says the company has another 150 employees working on a range of other products, including small and medium-sized optical crossconnects for the metro and core portions of carrier networks.

Industry sources believe Axiowave is creating a partially optical multiservice core switch that will be a competitor to the 7670 platform from Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and gear from Équipe Communications Corp.

"We're making very good progess," Chatter says. Products are in trials with a number of prospects, and Axiowave plans to make an official announcement in the latter part of 2002.

Chatter and Stata founded Axiowave in May 2000, a few months after the core routing company they founded, Nexabit Networks, was purchased by Lucent Technologies Inc. (NYSE: LU) (see Chatter's New Box, Lucent Cleans Up Core Routing , and Whatever Happened to X?). In fact, many Lucent employees followed Chatter to Axiowave after he left to form the startup (see China Mobile Likes Juniper). Stata serves as Axiowave’s chairman.

The two also founded an optical fiber company, OmniGuide Communications Inc., in September 2000 (see A Fiber Filled With Air). Although Chatter isn't active in the management of that company, Stata is billed as its acting CEO.

Chatter says Axiowave is well funded, having raised about $80 million from Madison Dearborn Partners, Soros Private Equity Partners, and other sources, including some of Chatter's own money.

This sum is adequate for their short-term needs, but not yet enough for the long haul. "In this market, you're continually raising money in anticipation of a longer slowdown," Chatter maintains. "We never have enough."

Despite this week's inadvertent ripping aside of Axiowave's cloak of secrecy, Chatter maintains a quiet and cautious demeanor about the company's doings. "There's more to our story," he says, "But we're still in stealth."

— Mary Jander, Senior Editor, Light Reading
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BobbyMax 12/5/2012 | 12:50:03 AM
re: Stealthy Startup Leads With Layoffs The fraud and scam penetrated by Nexabit was of very high calibre. Lucent discontinued the product as soon it was discovered that the product did not work. Charging a billion dollar for piece of junk is the highest act of dishonesty.

Nexabit took full advantage of Lucent by sellinbg a piece of junk which could not be salvaged. I am surprised that Lucent did not take any action against the Nexabit management for its fraudulent activities.

Nexabit almost depleted a billion dollar of cash from the Lucent assets. It is a common tactics for companies like Nexabit to misrepresent everything -- product, technology, customers and revenues.

There are a number of companies ready to do what Ascend, Octel Communications,SpringTide, Nexabit, Alteon, Xylan, and thousands of other fraudulent companies have done to the other US companies. This kind of fraud must be stopped.

Acquiring start-ups is a very risky business. In the last 3-4 years the tales of deceptions have become more and more intense.
sjd5 12/4/2012 | 10:39:59 PM
re: Stealthy Startup Leads With Layoffs It's a good thing he is not saying much. You can't trust anything he says.
realdeal 12/4/2012 | 10:39:53 PM
re: Stealthy Startup Leads With Layoffs "Our primary list of customers includes, but is not limited to, Global Crossing, Yipes, Xo, MFN, Mcleod, and Williams. We are also in a number of trials with several BLECS and CLECS"
ipv6 12/4/2012 | 10:39:53 PM
re: Stealthy Startup Leads With Layoffs I heard that the Nexabit router Lucent bought never worked as a router...
chechaco 12/4/2012 | 10:39:51 PM
re: Stealthy Startup Leads With Layoffs Are you looking for technical details or just making a wave?
And I've heard that ipv6 is neither IP nor v6.
Lichtverbindung 12/4/2012 | 10:39:51 PM
re: Stealthy Startup Leads With Layoffs I have heard many horrors story about Nexabit, it is usually represented as a typical scam of the glory days of the Internet bubble.
Now, I have seen recently that Lucent announced a new hi-capacity ATM/MPLS switch TMX-880 and that it was based on the Nexabit platform.
Is this Lucent's marketing spin or did Lucent get finally something out of Nexabit ?
loveduck 12/4/2012 | 10:39:49 PM
re: Stealthy Startup Leads With Layoffs LuxN had 3-4 round of lay off,but nothing show up in Light reading. Have any of you heard anything about LuxN? They treat employee very bad and never honest to their employees.

Dead Duck
gladiator1 12/4/2012 | 10:39:48 PM
re: Stealthy Startup Leads With Layoffs Yep, the TMX-880 is indeed the Nexabit platform. I have one of them in our labs. Surprise! Surprise! it works reasonably well.

Hey, give Lucent some credit. They have at least managed to salvage the Nexabit platform as opposed to Tellabs (Netcore), Unisphere (Castle Networks), Ciena (Omnia), Cisco (Monterey) - the list goes on - where the acquired platforms have been written off/cancelled.
let-there-be-light 12/4/2012 | 10:39:47 PM
re: Stealthy Startup Leads With Layoffs Nexabit a scam? How dare you?

I can say with certainty:

All 100% idle chatter
ivehadit 12/4/2012 | 10:39:42 PM
re: Stealthy Startup Leads With Layoffs the balmy beaches of jamaica
rust the circuits
in my arm
-unknown author

at $900M and counting, mukesh is just having fun. don't look for anything significant from him.

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