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Ex-PhotonEx?

After failing to nail down business with the U.S. government for its Global Information Grid Bandwidth Expansion (GIG-BE) project, PhotonEx Corp. may now be forced to wind down operations, say sources close to the company. A final closure date hasn't been set, but they tell us company managers are now trying to work out severance packages and other items needed to put the company to rest.

Of course, PhotonEx isn't alone in feeling the pain in the frigid long-haul market. It doesn't help that the segment was overfunded and rife with competition -- PhotonEx, OptiMight Communications, Ceyba Inc., Xtera Communications Inc., and Innovance Networks collectively represent more than $623 million in venture capital put to work in long-haul networking startups (see OptiMight Be Shutting Down and Ceyba Shuts Down).

Even Corvis Corp. (Nasdaq: CORV), which has outlived several companies in the long-haul space, has switched gears, relying on its indirect ownership of Broadwing Communications for 99 percent of its revenues for its most recent quarter (see Corvis Narrows Q2 Loss).

"The government was their last chance," says one former PhotonEx employee, asserting that PhotonEx CEO Kristin Rauschenbach was persistent in trying to convince the government to use PhotonEx's gear, even after the Feds had made up their "mind." And "she could talk a starving dog off a meat truck," says the ex-PhotonExer.

Nothing has been officially made public regarding what vendors are in the running for the GIG-BE deal. Corvis remains the only vendor to publicly tip its hand as to how it's done in the bakeoff so far, but none of the analysts handicapping the race listed PhotonEx among the winners.

PhotonEx's eagerness -- or desperation -- to win some GIG-BE business became apparent in recent weeks when it announced two executive appointments related to supporting its efforts (see PhotonEx Hires NA Customer Chief and PhotonEx Hires Government Guru).

The company was founded in September 1999 and had claimed more than $88 million in funding and 140 employees by November 2000. In January 2001, it added CFO Patrick Scannell to its management team; Scannell left the company earlier this year.

By April 2001, PhotonEx boasted more than 190 employees as it moved into a 150,000-square-foot facility in Maynard, Mass. The company announced that it had landed $90 million in additional funding by October 2001 (see Photonex Scores Huge 3rd Round). That financing round, the company said then, would support the company's operations until late 2003.

In January 2002, PhotonEx helped form the 40G Collaborative, a consortium of components vendors and systems vendors that included LaserComm Inc., which is now closed, Lightwave Microsystems, which sold for cheap, and New Focus Inc. (Nasdaq: NUFO), which got out of the business [ed. note: Now that's collaboration!]. (See NeoPhotonics Buys Lightwave Micro, New Focus Gets New Focus, and Headcount: Such Language!.)

In June 2002, PhotonEx announced that Deutsche Telekom AG (NYSE: DT) had completed a successful field trial using PhotonEx's equipment. By then the company's headcount had dropped to about 60. A big contract from the carrier never materialized (see Core Optical Startups Chill Out ).

By December, when it was apparent that telecom carriers weren't going to buy its gear, the company had opened a Washington office, in the hopes of homing in on opportunities with the U.S. government (see PhotonEx Goes to Washington).

PhotonEx officials did not return calls seeking comment.

— Phil Harvey, Senior Editor, Light Reading

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Milano 12/4/2012 | 11:38:39 PM
re: Ex-PhotonEx? Ceyba is dead. PhotonEx is next. More layoffs at Nortel. Lots of great people and their families in s***.

B. Ebbers, the man who engineered the greatest fraud of modern times is enjoying sunny days in one of the most luxurious ranches in the world.

Time for "Workers of the world, unite"??

M.
benson 12/4/2012 | 11:38:37 PM
re: Ex-PhotonEx? Whoever the "ex-PhotonExer" was who came up with this statement should win an award:

"She could talk a starving dog off a meat truck".

Priceless!!

benson
MNewsom 12/4/2012 | 11:38:32 PM
re: Ex-PhotonEx? no awards for big time clich+¬s (or maybe "hackneyed phrases"?)! It is good imagery though.
nbwaite 12/4/2012 | 11:38:29 PM
re: Ex-PhotonEx? > On the one hand, let's look at some summary figures.
>
> First, in A. Odlyzko's
>
> Internet traffic growth: Sources and implications
>
> at
>
> http://www.dtc.umn.edu/~odlyzk...
>
> is
>
> Table 1. Traffic on Internet backbones in U.S.. For each
> year, shows estimated traffic in terabytes during
> December of that year.
>
> Data
> Year (terabytes)
>
> 1990 1.0
> 1991 2.0
> 1992 4.4
> 1993 8.3
> 1994 16.3
> 1995 ?
> 1996 1,500
> 1997 2,500 - 4,000
> 1998 5,000 - 8,000
> 1999 10,000 - 16,000
> 2000 20,000 - 35,000
> 2001 40,000 - 70,000
> 2002 80,000 - 140,000
>
> So, according to Odlyzko, the traffic on the Internet has been
> growing quickly, at least through 12/2003.
>
> Second, in the UBS Warburg report of June 3rd, 2003,
> 'Broadband Moving to the Front Burner', there is:
>
> Table 4: Global Carrier Capital Spending and Telecom
> Equipment Sales ($ millions)
>
> 2000 2001 2002E 2003E 2004E
> Global Capex $252,387 $240,639 $167,181 $156,130 $153,867
> Y/Y Growth -5% -31% -7% -1%
>
> Global Telecom 146.423 119,246 83,012 74,436 73,819
> Equipment Sales
> Y/Y Growth -19% -31% -10% -1%
>
> Note: Includes UBS Warburg coverage companies only.
>
> So, according to UBS Warburg, in 2003 there will be at least
> $156 B (billion) in carrier capital spending and $74 B in
> telecom equipment sales. Sounds like a lot of money.
>
> So, for the Internet, traffic is growing quickly, and for
> telecommunications, spending for more capacity is large.
>
> On the other hand, this article and others indicate that
> vendors of equipment for more core capacity are having trouble
> getting revenue. Or, $74 B everywhere but not a drop for
> PhotonEx.
>
> Individually each hand might seem okay, but together they
> don't make sense.
>
> So, some questions:
>
> (1) Where. Where is the money going? We are losing track of
> over $156 B in total and over $74 B in equipment.
>
> (2) Capacity. Okay, okay, there was 'massive bubble
> mentality over-building' and 'a huge grotesque outrageous
> obscene really offensive glut of excess core capacity'.
> So, they deployed twice as much as needed, three times as
> much, maybe even four times as much? Okay, when?
> According to Odlyzko's numbers, unless these huge
> grotesque, etc. deployments were in the last 12 months or
> so, capacities should be filling up now and there should
> be more need for expansion, revenue for PhononEx, etc.
>
> Sure, in some cases, more actual useable capacity is available
> from little more than adding another line card and adding
> another wavelength, etc. That may explain how to meet
> Odlyzko's growth without much revenue for PhotonEx for some
> months, but does not explain where the $156 B and $74 B are
> going. Also, with Odlyzko's growth, can't just add another
> line card and wavelength for very long before before need to
> light more fibers, get larger switches and routers, etc. and
> spend money with PhotonEx, etc.
>
> This whole picture doesn't hold together.
>
> Clarification?
dr_smith 12/4/2012 | 11:38:28 PM
re: Ex-PhotonEx? Ebbers, Winnick, Fastow, Grubman, et al propagated a billion dollar fraud that dozens of companies were built on and even within those companies the big lie "there is no bandwidth glut" was promoted.

History is filled with retribution against those who have such destructive behavior. Are we to expect now that it will somehow not repeat itself?

...Danger Will Robinson....
nbwaite 12/4/2012 | 11:38:28 PM
re: Ex-PhotonEx?


On the one hand, let's look at some summary figures.

First, in A. Odlyzko's

Internet traffic growth: Sources and implications

at

http://www.dtc.umn.edu/~odlyzk...

is

Table 1. Traffic on Internet backbones in U.S.. For each
year, shows estimated traffic in terabytes during
December of that year.

Data
Year (terabytes)

1990 1.0
1991 2.0
1992 4.4
1993 8.3
1994 16.3
1995 ?
1996 1,500
1997 2,500 - 4,000
1998 5,000 - 8,000
1999 10,000 - 16,000
2000 20,000 - 35,000
2001 40,000 - 70,000
2002 80,000 - 140,000

So, according to Odlyzko, the traffic on the Internet has been
growing quickly, at least through 12/2003.

Second, in the UBS Warburg report of June 3rd, 2003,
'Broadband Moving to the Front Burner', there is:

Table 4: Global Carrier Capital Spending and Telecom
Equipment Sales ($ millions)

2000 2001 2002E 2003E 2004E
Global Capex $252,387 $240,639 $167,181 $156,130 $153,867
Y/Y Growth -5% -31% -7% -1%

Global Telecom 146.423 119,246 83,012 74,436 73,819
Equipment Sales
Y/Y Growth -19% -31% -10% -1%

Note: Includes UBS Warburg coverage companies only.

So, according to UBS Warburg, in 2003 there will be at least
$156 B (billion) in carrier capital spending and $74 B in
telecom equipment sales. Sounds like a lot of money.

So, for the Internet, traffic is growing quickly, and for
telecommunications, spending for more capacity is large.

On the other hand, this article and others indicate that
vendors of equipment for more core capacity are having trouble
getting revenue. Or, $74 B everywhere but not a drop for
PhotonEx.

Individually each hand might seem okay, but together they
don't make sense.

So, some questions:

(1) Where. Where is the money going? We are losing track of
over $156 B in total and over $74 B in equipment.

(2) Capacity. Okay, okay, there was 'massive bubble
mentality over-building' and 'a huge grotesque outrageous
obscene really offensive glut of excess core capacity'.
So, they deployed twice as much as needed, three times as
much, maybe even four times as much? Okay, when?
According to Odlyzko's numbers, unless these huge
grotesque, etc. deployments were in the last 12 months or
so, capacities should be filling up now and there should
be more need for expansion, revenue for PhononEx, etc.

Sure, in some cases, more actual useable capacity is available
from little more than adding another line card and adding
another wavelength, etc. That may explain how to meet
Odlyzko's growth without much revenue for PhotonEx for some
months, but does not explain where the $156 B and $74 B are
going. Also, with Odlyzko's growth, can't just add another
line card and wavelength for very long before before need to
light more fibers, get larger switches and routers, etc. and
spend money with PhotonEx, etc.

This whole picture doesn't hold together.

Clarification?



zettabit 12/4/2012 | 11:38:27 PM
re: Ex-PhotonEx? If LightReading got their numbers right Photon-Ex consumed $178M of funding in a little under 4 years.

That is a $3.8M a month burn rate if you assume constant burn over their entire life. Given that they would have had a ramp-up (and also a major ramp down), this means that Kristin was spending "like it was 1999"! They could have gotten to where they are today for a lot less if they had worked smarter (I appologize in advance for using that term).

This again goes to show that some exec teams are totally useful at ensuring a judicious use of cash.
zettabit 12/4/2012 | 11:38:27 PM
re: Ex-PhotonEx? ...they were part of the Iris Labs group and shut down back in 2001.

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

Add another $28M to the $623M listed in the article.
DarkWriting 12/4/2012 | 11:38:26 PM
re: Ex-PhotonEx? This again goes to show that some exec teams are totally useful at ensuring a judicious use of cash.

*******************************

Their web site does not list a CFO or VP Finance. Perhaps that was the problem?

DW
whyiswhy 12/4/2012 | 11:38:25 PM
re: Ex-PhotonEx? Last new flash from company:

PhotonEx Hires Government Guru

Now there's a bright idea for getting something done efficiently, on time and within budget.

Doh!

-Why
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