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Unisphere Lays Off 37

Light Reading
News Analysis
Light Reading
4/5/2000

Thirty-seven Unisphere Solutions Inc. http://www.unispheresolutions.com employees are looking for new jobs this week.

Most of the positions lost were in marketing, finance, and manufacturing departments. Engineering employees dodged the bullet.

"We didn't need two production lines and four marketing and accounting teams," says Jim Dolce, president of Unisphere. "When you combine three organizations, there's redundancy. Rebalancing the company was the prudent business thing to do in moving toward profitability."

Some are speculating that the lay-offs are a sign of further weakening in the Unisphere organization, but company execs deny that emphatically, and say the lay-offs are simply part of the process of consolidating the three start-ups that it bought last year. In fact the company plans to hire at least 100 to 150 new employees this year, says Dolce. The company already employs over 600 staff.

Unisphere was supposed to provide its parent company, Siemens AG http://www.siemens.com, with a strong foot-hold in the North American telecommunications market. But after paying a combined price tag of $1 billion for Redstone Communications, Castle Networks, and Argon Networks, it is still trying to put all the pieces together.

Two of the three acquisitions, Redstone and Castle Networks, have paid off for the company. But its acquisition of Argon, which was supposed to provide a product to compete with Cisco's 12000 Switch Router and the Juniper M40 and M160 core routing products, has been a big dud. Over the last year the company has re-engineered the product, causing Unisphere to miss its planned early 2000 beta trials. Now, it says the product will be ready by the end of the year (see Unisphere Trips, Stumbles ).

"The new product will look very different from what Argon had before the acquisition," says Dolce. "We expected that we would hit stiff competition from Juniper and Cisco, so we decided to hold back and build something that won't be just a 'me too' product."

However, analysts say that Unisphere has missed the boat.

"They basically lost a critical window of opportunity in core routing," says Raj Mehta senior analyst for Ryan Hankin Kent Inc. (RHK) http://www.rhk.com, a telecommunications consultancy. "The market in the core is very fierce. If they aren't going to be able to deliver by this summer, there's no point in trying to compete."

Marguerite Reardon, senior editor, Light Reading

http://www.lightreading.com

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