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Optical/IP Networks

Turkey Awards

In commemoration of Thanksgiving Day in the United States, Light Reading editors introduce the first annual Turkey Awards, in honor of the biggest cluckups in the telecommunications industry – in short, the actions we'd rather all forget.

So, let's get on with it and stuff those birds:

No. 1: Fraud Turkey

WorldCom Inc. (OTC: WCOEQ) is without a doubt the big dinde farcie of the bunch (see WorldCom's at $7.1 Billion and Counting). Actually, WorldCom came with several fowl figures who stuffed themselves at shareholder expense. There was CEO "Mississippi" Bernie Ebbers, who parlayed fictional profits and gigantic company loans into millions of dollars in private real estate holdings (many of which he still has), including a Canadian timber plantation (see WorldCom's Ebbers Stands Firm and Sidgmore Takes Control at WorldCom). Then there was the naughty CFO Scott Sullivan, who was more preoccupied with building his own McMansion on the Florida coastline than he was with cleaning up the WorldCom books (see Ex-WorldCom Execs Charged With Fraud). As a nice sideshow, we had the lapdog "analyst" Jack Grubman who confused financial analysis with New York social climbing (see Jack Grubman Goes).

Turkey Points:

No. 2: European eBoned Turkey

GT Group Telecom became eBone (see GTS Renames Itself "Ebone"), which was bought by KNPQwest (see KPNQwest Buys GTS Biz and KPNQwest's Midnight Hour ), which was then sold to Interoute Telecommunications (see Interoute Acquires Ebone), which then went into receivership (see Interoute Goes Into Receivership). Got that?

This has now become a classic carrier recipe for disaster: Take a middling backbone carrier, bake with optical networks for a couple of years, heat until bubbling, reduce to a saleable pile of assets, glaze with hype, then pass it over to weird uncle Lenny, who's bound to spill it all over his tie. What happens next is anyone's guess (see Hey, Buddy... Wanna Buy a Network?).

Turkey Points:

No. 3: Tall Tales Turkeys – Qwest and Tellium

This was a tie. Though completely different in scale and business, the two companies, had similar talents for making revenues disappear – and they were connected. Qwest Communications International Inc. (NYSE: Q) CEO Joe Nacchio promised growth to the moon. And Tellium Inc. (Nasdaq: TELM) execs, heavily betting on contracts with Qwest, liked to phone up periodically and spew giblets on anyone who dared question their aggressive revenue projections.

Tellium's revenues, by most modern accounting standards (and unlike Barry Bonds's head) have shrunk considerably (see Tellium Reports Q3).

Qwest, Tellium’s largest customer, ran into trouble with, well, math, and had to rescind many years of inflated numbers (see Qwest's Amazing Shrinking Revenues). Then, as Tellium's business fell apart and it was forced to deflate its ranks, CEO Harry Carr disappeared for a while, like John Travolta's career does about twice a decade (see Dude, Where's My Carr?). Later it emerged that top executives had been given fat company loans (see Tellium Execs in Trouble?). All this for a company that barely even cracked the 7-figure quarterly revenue mark. These days, Tellium is pared to the gizzard, trying to preserve its remaining IPO wishbone for a rainy day (see Shopping, Lifting, Moving On). We can't wait for their next call. Qwest is trying to reorganize under the new CEO Richard Notebaert, who appears hellbent on cleaning out Nacchio's crew (see Qwest Purge Continues)

Turkey Points:

No. 4: Acquisition Integration Turkey – Ciena's K2

Like the weird Thanksgiving Jello mold that everyone's afraid to touch, the Cyras K2 product is still sitting at the end of the buffet line, scaring the children. Ciena Corp. (Nasdaq: CIEN) bought the startup – and the product – for $1.1 billion in 2001 (see Ciena's K2: What Problems?), but it doesn’t look quite so appetizing anymore. We wonder when, if ever, Ciena will figure out that no one's going to touch the wiggly, neon concoction and decide to just chuck the whole project, mold and all.

Turkey Points:

No. 5: Product Turkey – Lucent's LambdaRouter

Networking technology or conceptual art? Some of the mad scientists over at Bell Labs didn’t know the difference. The tale of Lucent Technologies Inc.'s (NYSE: LU) LambdaRouter once again revisits the theme of executive denial. As late as April 2002, Lucent execs insisted there was a viable market for a MEMS-based optical switch they cooked up (see Lucent Tries On That Startup Look). But only a few months after LambdaRouter was touted as one of the saviors of the war-torn republic of Holmdel, N.J., Lucent dipped the damn thing in bronze and started using it as the world's largest paperweight and (see Lucent Terminates the LambdaRouter). It turns out service providers weren’t willing to spend large amounts of their budgets on experimental, all-optical switching technology for a core market awash in overcapacity. But it really does hold down paper well.

Turkey Points:

No. 6: Startup Turkey

Yes, we got burned on this one, too. It was, at one time, a Top Ten Private Company. Now it’s gone. We should have known something was up with John Midgley. His eyebrows are just too damn big. He looks like one of the back-up dancers in Michael Jackson's "Thriller." Can't you just see him doing that slide-to-the-side dance step with his head askew and his arms akimbo? He held that his company was a serious “engineering” company. Well, it seriously engineered itself out of existence [cue Vincent Price laugh here].(See Has Lightwave Micro Found a Buyer?.)

Turkey Points:

No. 7: Quarterly Conference Turkey – Greg Reyes, Brocade

As they say on Wall Street, Brocade Communications Systems Inc. (Nasdaq: BRCD) CEO Reyes usually gives good conference call – maybe a little bit too good (see Brocade CEO: What, Me Worry?). Just months ago Greg Reyes was puffing up expectations like so many turkey tail feathers. In the end, things didn't turn out as colorful as he'd hoped. During its third quarter, Brocade fell well short of plan and its share price collapsed like a flan in the cupboard (see Market Spanks Brocade Hard).

Granted, not all of this was Reyes's fault. But we can't help notice his strut has seemed a bit gimpy lately.

Turkey Points:

No. 8: PR Turkey – Caspian

This company, once a Top Tenner, gets our vote for its unfortunate tendency to bug the press about... well, nothing.

Witness this excerpt from a Caspian Networks update, sent to press and others via email:

    Caspian may have been a little quiet this summer, but the heat has been on in engineering as the company girds for a multi-vendor shootout at a potential customer. While Caspian has been undergoing testing in the labs of this top tier North American IP carrier over the last year, Caspian's Apeiro soon faces off in a final contest against a handful of other announced and emerging products at this well-known carrier.
Maybe next time they should just keep quiet a little longer.

Turkey Points:

No. 9: Stealth Turkey – Calix Networks

The concept of stealth startup mode these days is about as cool as an "actor" that works at Starbuck's. Calix Networksmay indeed be building something great, but the "We're in stealth!" message has become tired.

We propose a time limit on stealth mode of three years. At the end of three years, you must either put up or shut up. Either you have something the market will care about or you don't. After unnaturally long stealth periods, it's natural to suspect that rather than building something great, many companies are simply burning the VC dough.

Turkey Points:

No. 10: Karma Turkey – Light Reading

What nerve, eh? On the eve of a holiday that's supposed to be spent remembering good fortune, we editors had the nerve to trot out this list of gaffes and blunders and general yack, all for a cheap laugh.

Don't get us wrong: We're not apologizing, nor do we regret giving companies a good lashing for the sake of some lighthearted holiday entertainment. All we're acknowledging here is that we're sometimes shocked (shocked!) at our own irreverence, but we are thankful to be working in an industry and at a time when things are, well, so gosh darn interesting.

Turkey Points:

By the way, did we miss any turkeys? If so, feel free to lambaste a bird or two in the message boards below.

— The Editors, Light Reading
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Drew Lanza 12/4/2012 | 9:16:14 PM
re: Turkey Awards First off, best wishes to the staff and families at Light Reading. You guys have brought a lot of cheer to an otherwise dismal year and you are much appreciated for it. Bless you.

I've got a wry observation for you that I've been bouncing around my friends as a, well, a theory of sorts (ahem! This is my theory...).

[see the Monty Python script at http://www.graphicszone.net/mo...]

You point out that you got burned on Lightwave Microsystems. By burned I assume you mean because you had it on your top 10 list and then, poof, it crashed into the wall. Don't feel bad. I started the damn thing in my mother's garage and I feel the same way. Heck, I was in the damn thing when it crashed.

I think you're mostly right when you say that we built a serious engineering company which seriously engineered itself right out of business. Astute observation. Wry, but astute.

Take as a given that Lightwave Microsystems builds the best PLC's out there. Take also as a given that they have won a large number of design wins with all of the major systems vendors out there. They did. So how come they crashed?

Here's my theory. I said in previous posts that what we're going through is an ice age of sorts. The one thing you don't want to be during an ice age is big and hungry. There's just not enough to eat. You starve to death,

We always get asked if Lightwave could have gone on a diet. Wrong analogy. Better to ask if the saber toothed tiger that was Lightwave could have transformed itself into a mouse. Not possible. Maybe through reincarnation, but definitely not through sheer force of will.

[Stay tuned for the reincarnation part, it's coming to a theater near you just in time for the Holidays!]

We build the best PLC's because we have our own fab and a stellar team of optical circuit designers. We have won all the design wins out there because we had a large engineering staff who could wrap the PLC's with control circuitry and software to meet the demanding requirements of our large customers. And we had a big packaging staff because our large customers refused to buy from us unless we were 'real'.

Light Reading asserted that we were a saber toothed tiger. We were. You were right when you put us on the Top Ten List. Ask Cisco, Lucent, or Nortel if we should have been on the list. They'll say so. But we got crunched during the ice age. Shouldn't we have? After 14 years, how could we change our nature?

I get asked all the time if I would do it differently knowing what I know now. Probably not. We set out in 1988 to build the world's best optical IC manufacturing company. We succeeded. Don't kid yourself. You can get a lot of satisfaction from recognition. Recognition is great. We're the King of the Forest. But recognition doesn't put food in our hungry belly. Well, at least we got to growl, eat meat, and prowl the forest for a little while. There are worse fates.

I don't think you got burned at all. That's my theory. The companies who really have something. Who have struggled and built world class products. Who have penetrated even the most stubborn and demanding accounts. They will be the first to go. They, of necessity, have to have a substantial burn rate to develop and manufacture those products and they have to maintain that burn rate to be able to sell to the large systems vendors. Only the mice will survive. Let's call that Lanza's Law of Perversity. It's often the accountants and cowards who survive the war, not the heroes.

It's really too bad. A lot of decent, talented people have labored for years at companies like Lightwave Microsystems. And they invented the future. Many of these companies have already crashed and burned. Many more will in 2003. And they'll get crushed exactly because they succeeded in building great technology and products. At the same time, a lot of smaller companies who have failed to produce anything may survive this ice age because they are just so damn small that they consume almost nothing and nobody takes notice. Perverse, isn't it? That's why I want the Law named after me. I definitely get the irony here.

At Lightwave, we build integrated optical circuits that combine, split, switch and attenuate light. All on a single substrate. And we wrap reliable control circuitry around it so it works to all of Telcordia's most demanding specs. We do it better than anybody else. Forgive me while I growl for a spell in this cold, dark forest.

As for Midgley and those eyebrows of his, I'm very happy to report that he has two lovely grown daughters who show no signs of having inherited that hirsute behavior. Thank god he married a beautiful Belgian woman (hi Christiane, I'm looking forward to the Holiday Party, will the girls be there?)

Keep up the good work, Light Reading, I'll buy the beers when next you're in town.

Drew Lanza
Founder
Belzebutt 12/4/2012 | 9:16:07 PM
re: Turkey Awards Looking through the K2 links, I found some hilarious material, from May 2000:

http://www.lightreading.com/do...


"Analysts like what theyGve seen. Gǣ[The] product is awesome. It has incredible density [and] carrier-class Sonet,Gǥ says Scott Clavenna, principal analyst at Pioneer Consulting LLC, http://www.pioneerconsulting.c.... "


"the K2 is opening to the sort of rave reviews that are more typically associated with Broadway billboards than optical networking announcements.

GǣIt sounds like Cerent-plus. Actually, it sounds like Cerent-plus-plus,Gǥ says Mark Lutkowitz, president of consultancy and analyst house Trans-Formation Inc. http://www.trans-formation.com. GǣTheyGre talking about an order of magnitude more data functionality than Cerent G which in itself was a revolutionary product. I thought Cerent was worth every penny of what Cisco spent to buy it. You can only imagine what this company is worth,Gǥ he adds.

Which raises the question of what will happen to the established Sonet competition G companies like Nortel Networks http://www.nortelnetworks.com and Lucent http://www.lucent.com -- when the product ships.

GǣTogether Cerent [now part of Cisco] and Cyras may just take over the Sonet market, and squeeze Nortel and Lucent badly,Gǥ Clavenna says. GǣNortel is already dropping prices significantly to compete,Gǥ he adds. "


"GǣYou have to take what they claim with a pinch of salt, because itGs in pre-production. But I see no reason to believe they canGt do what they are saying,Gǥ says Lutkowitz. "


"At some point, the K2 platform also will support frame relay, DSLAM, MPLS and WDM capabilities, Cyras says."




So where is this amazing product that was going to put Nortel out of business? Bwahahahaha...

Elvis Doesn't Live 12/4/2012 | 9:16:06 PM
re: Turkey Awards I really love how you show up on these boards and carp on about how much everyone else sucks when NT has fallen as far as it has. Your company sells products only because of its installed base, not technological superiority.

And by the way, I could spend 15 minutes pulling together quotes that had good things to say about Nortel. Should we take them any less seriously? Clavenna is a vendor mouthpiece who made his $$$ quoting for press releases and writing vendor analyses.
Nuetrino 12/4/2012 | 9:16:05 PM
re: Turkey Awards "Your company sells products only because of its installed base, not technological superiority"


When has technical superiority been the determininig factor in building a successful coompany?

There are many mroe examples of technical superiority taking a back seat to good business fundamentals, such as;
Micrsoft vs. Sun
Beta vs VHS
Cisco vs Bay

...oh why bother! This is an old argument
Peter Heywood 12/4/2012 | 9:16:05 PM
re: Turkey Awards I don't think the Cisco v Bay example is true, either.

Ex Wellfleet/Bay people will tell you that their hardware was much, much better than Cisco's, but they couldn't catch Cisco on software.
Belzebutt 12/4/2012 | 9:16:05 PM
re: Turkey Awards When has technical superiority been the determininig factor in building a successful coompany?

What you might consider "technical superiority" could in most cases be characterized as buidling stuff that works reliably and makes money vs. building science projects.
Belzebutt 12/4/2012 | 9:16:05 PM
re: Turkey Awards The K2 got the turkey award, not any Nortel product, that's why it talked about it.

You have to admit those quotes are pretty funny!
Litewave 12/4/2012 | 9:16:04 PM
re: Turkey Awards Author: Belzebutt
So where is this amazing product that was going to put Nortel out of business? Bwahahahaha...


Hey B-butt, what about this one...

"We've worked on this. Instead of making a lot of noise, we put our head down and we've delivered it on time," said Brian McFadden, president of Nortel's optical long-haul division

"Nortel Networks is redefining the economics of networking through our next generation optical switches...", said Brian McFadden

".... brings the optical long-haul network and metro together," says Marco Pagani

"I'm really excited," Mumford says. "Technology is a key focal point for Nortel."

Heh heh heh. At least the K2 is generating revenue and has positive analyst comments.

Can't say the same about the HDX, can you.

So where is this amazing product that was going to redefine the economics of networking for customers dumb*ss?
Belzebutt 12/4/2012 | 9:16:03 PM
re: Turkey Awards At least the K2 is generating revenue and has positive analyst comments.
... dumb*ss


Why the anger?

The HDX is in fact generating revenue. Neither product is selling a lot right now.

The K2 certainly has generated positivie analyst comments, and that's precisely what I posted and what's so funny! Positive analyst comments two years ago, Turkey Award today.
drone387 12/4/2012 | 9:16:03 PM
re: Turkey Awards I would have expected a "What A Tool" for Top 10 post by now. Of course, what I really want to see is the BobbyMax Top 10 Turkey list!
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