Geyser Reduces Staff

Yet another optical networking startup has taken steps to preserve its precious capital. Geyser Networks Inc. confirmed that it layed off 20 percent of its workforce this week.

The 120-person company cut jobs across the board, including positions in sales, marketing, and operations. Contract workers were also included in the reduction, says Kent Novak, vice president of marketing for the company.

The startup raised a $37.5 million second round of funding back in August 2000, bringing the total to $44.5 million. But it hasn’t raised another round since then, leaving some to wonder if the company is running low on cash. But Novak says that is not the case at all.

”We’re fine in terms of cash flow right now,” he says. “But we don’t want to get in a position where we are trying to raise more cash in a bad market without enough under us. That’s why we made these proactive cuts.”

The cuts come about a month after Geyser announced plans for expansion (see Geyser Networks Expands). On March 3, the company issued a press release announcing that it had leased a 24,000 square-foot facility that would more than double the size of its quarters in Sunnyvale, Calif. The company also announced that it would beef up hiring to fill the new space to full capacity within 18 months.

Novak says that the cutbacks haven’t affected the plans to add more space. In fact, Geyser employees have already moved into the new facility, which sits right next to its current headquarters. What has changed is the timeline for filling the space, he says:

“We will still continue on. As we grow during these difficult times we’ll be more cautious, and it will take longer than we had first thought.”

Novak also insists the cutbacks are not indicative of any problems developing the product. He says the company is currently in beta trials with its OSM 4800 Services Manager, an optical networking product for the metropolitan area network, and expects it to start generating revenue this summer with a ramp-up in production expected in Q3 2001 (see Geyser Emits First Product).

This news comes at a time when others in Geyser’s market are making cutbacks -- as did Mayan Networks Inc. (see Mayan Ruins?). And some analysts say it's the only sensible thing to do.

"It’s good business management when times are tight and you are cutting back and still have cash in the bank,” says Scott Williams, senior consultant at TeleChoice, a strategic consultancy. “It’s really too soon to tell if Geyser is in trouble. It really depends on who they have lined up as customers and how much they are willing to buy.”

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

whineceller 12/4/2012 | 8:34:01 PM
re: Geyser Reduces Staff I saw no telltale product pdf or service department on the site. No press releases about sales except for a Motorola agreement. The description of the product sounded like a tall order

Geyser Networks' Optical Services ManagerGäó (OSM 4800) is a multi-service platform that combines DWDM (Dense Wave Division Multiplexer), SONET Cross-Connect, SONET ADM
(Add-Drop Multiplexer), MPLS router and IAD (Integrated Access Device) in a single chassis.
Using the OSM 4800, a service provider can build SONET or optical rings to deliver the array of services: TDM services (voice, private line services), all existing data services (ATM,Frame Relay, Packet-Over-SONET, Transparent LAN service), and streaming audio and video over IP, in addition to the new managed SLA-based IP/Ethernet services and MPEG-II video
services. A sixteen wavelength integrated DWDM capability multiplexes multiple wavelengths
over the same fiber to form multiple logical rings to increase the OSM 4800 bandwidth capacity.
joe_average 12/4/2012 | 8:33:56 PM
re: Geyser Reduces Staff If Geyser could do everything in that product description for $47.5M, it would be a miracle. And especially for only 120 pre-layoff people!

Wait maybe that's why they are laying off people - it can't be done for that amount of funding.

It doesn't sound like Geyser will be gushing forth anytime soon (or ever?).
Curryfish 12/4/2012 | 8:32:26 PM
re: Geyser Reduces Staff Everybody seems to be very pessimistic about MSPP makers. So who will be the winners? It seems that even the walking legend Wu-fu Chen is losing his magic. Why?
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