Haleos: Final Days?

What does it take to save a company? In the case of optical sub-assembly manufacturer Haleos Inc., the answer is $15 million or more.

That's the amount that Haleos is seeking to raise from investors, according to Art Pumo, its VP of human resources. "We're in discussions with current investors and new investors, and we're hopeful of resolving the situation in the next two to four weeks," he says.

But sources close to the company say things don't look that hopeful at all. Haleos has reportedly been trying to raise money since last summer, and at the beginning of last week (February 25) it was forced to "furlough" 85 employees (Pumo's word), most of whom are still owed four weeks of pay. Only the executive team remains at the company.

So what's gone wrong?

At first glance, Haleos looked like a good prospect. Founded in 1996, the company had plans for an Aladdin's cave of optical sub-components and process technology. Its main business is making and selling fiber arrays -- silicon sub-assemblies with tiny grooves to hold fibers in position accurately. It also has its fingers in a number of other pies, including foundry services and the manufacture of ball lenses, lensed fiber tips, and other components for optical interconnects.

Haleos boasts that it has 160 customers in 15 countries. These most probably include JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU) and Newport Corp. (Nasdaq: NEWP).

The trouble was, apparently, that Haleos spread itself too thin. "Nothing really got focused attention. There's lots of stuff on the Website, but none of it ever got made," an ex-employee tells Light Reading.

A one-time customer of Haleos echoes this sentiment. "My take on their demise is poor execution. [Haleos] seemed like they were trying too many things. Selling fab services and selling devices... they should have picked one or the other."

The bottom line is that Haleos appears to have spent all their money. According to sources, it has burned through $22 million of investors' money since the spring of 2000. Haleos refuses to name its investors, however. "It's one of the conditions of negotiations that we didn't name them," says Pumo.

But the investors themselves aren't so coy. Court Square Ventures LLC, which is reportedly the lead investor, lists Haleos among the portfolio companies on its Website. In turn, it lists Newport, Vawter Capital, and Virginia Tech as the other investors.

Although Haleos hasn't actually filed for bankruptcy at this point, a former employee says it's only a matter of time. The company owes $13 million in secured debt, and upwards of $0.5 million in backpay, he says -- which goes a long way towards explaining the $15 million funding target.

If Haleos can't raise further investment, then it is unlikely to be able to pay its employees -- ever. "Money has to go to secured debtors first. Even if they auction off all the company's assets, it will not be enough to cover [the backpay] as well." — Pauline Rigby, Senior Editor, Light Reading
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Component_Guy 12/4/2012 | 10:49:26 PM
re: Haleos: Final Days? Haleos has a lot of really talented folks. Unfortunately, they picked the worst time to expand their operations. One large contract can really make or break a small company like this. When a contract gets cancelled after you've invested the money in new plant, well....

crack boy 12/4/2012 | 10:49:24 PM
re: Haleos: Final Days? I hope Hokie Man is right. I've dealt with Haleos a number of times, and was really impressed with their engineering team and executive management. Good luck with the funding...
Hokie Man 12/4/2012 | 10:49:24 PM
re: Haleos: Final Days? Has Lightreading turned into the National Enquirer? These editors, referencing only "former employees" and a "one-time customer," only have a fragment of the storyGǪ Haleos will be a comeback story of 2002. Its not done yet.

The Company does have a widespread range of technologies -- it intentionally didn't pick one or the other because all of its products and services compliment each other. Haleos, itself, is its best source for whatever it needs. The only thing that hurt this company was timing -- the nuclear winter of 2001 -- has knocked everybody downGǪ Haleos isn't exempt.

Hokie Man
Eye-in-the-Sky 12/4/2012 | 10:49:23 PM
re: Haleos: Final Days? >>>>>>>>>> But sources close to the company say things don't look that hopeful at all. Haleos has reportedly been trying to raise money since last summer, and at the beginning of last week (February 25) it was forced to "furlough" 85 employees (Pumo's word), most of whom are still owed four weeks of pay. Only the executive team remains at the company <<<<<<<<<<

Let's seee.... Hmmmmm - who's left to manufacture stuff - get real idiots - the company is a downer
neutron bomb 12/4/2012 | 10:49:10 PM
re: Haleos: Final Days? All the good employees are as good as gone. They are interviewing with other companies or are leaving the area and will soon have other jobs. Many already do.

The 'temporary furlough' is only the most recent deception from this company. They have been saying for months that financing is just around the corner, and every time, its turned out to be a mirage. Thats how they kept the employees working without pay.

On the bright side, the executive team can take over making fiber arrays and running the cleanroom equipment. And then the executives can pay all the broke employees with defective fiber arrays and metallized wafers. That could really turn the company around in 2002.

danimal 12/4/2012 | 10:49:04 PM
re: Haleos: Final Days? I know things seem pretty bad-even hopeless-with Haleos. They are loaded with debt and accounts payable, they never had positive gross margins, they failed to produce many products advertised, and now they laid off all their employees without having paid them for four weeks of work. How could it get any worse?

Well, there ARE some positive things about the company and its employees that everyone should remember in these difficult times. To remind people to focus on the positive and 'keep on the sunny side of life' as they say, I have provided a short list of 20 really positive things about the company. I am sure there are many more:

1) The company is located in Blacksburg, VA, the best place on Earth!
2) The company has a lot of really nice equipment that will soon be auctioned for low low prices.
3) The executive team has a lot of experience with guiding companies into bankruptcy.
4) Many of the employees are really fun to drink beer with.
5) Several of the employees are good at playing darts (wednesday nights at Ton 80 club)
6) The executives were really cool about the technical staff playing ping pong nonstop for the last 6 weeks the company was open for business.
7) The company got lots of free stuff from suppliers who are being really cool and waiting patiently for their money.
8) The company has a giant back room that would be PERFECT for growing kind bud.
9) The company's deionized water system is large enough to both make a bitchin' deionized swimming pool, and provide the bud with purified and fortified water having the perfect blend of micronutrient minerals.
10) The official Haleos coffee/beer mugs are a full 12 oz.
11) The employees learned firsthand the personal and emotional value in providing volunteer services for needy companies.
12) The company has a die bonder thats never been used, so it has retained its resale value.
13) The company got a lot of money last year from some very rich people. Hey, thats positive.
14) The companies products weren't profitable, so the company is saving lots of money by not producing them.
15) The company was never really anal and annoying about dirt in the cleanroom.
16) The employees are so nice and friendly and love the company sooooo much they didnt at all mind working for a month without being paid. They are just itching to provide more volunteer services for Haleos.
17) The executives will absolutely, positively, definitely raise all the money they ever needed and Haleos will shortly thereafter be the most successful company in the world, just as soon as they find a rich investor who doesnt know anything about fiber optics and have one more meeting.
18) The company will soon expand to begin manufacturing particle beam accelerators, radio telescopes, potato chips, FunYuns, communications satellites, computer chips, peanut brittle, lasers, ball bearings, lollipops and other hard candies, telephones, carpets (specializing in short-nap carpets), automobiles, musical instruments, trains, paper clips and other wire-formed products, skyscrapers, airplanes, and Ginsu knives. There is lots of synergy here, since Haleos will be the source of all the parts, snack foods, and services it needs.
19) Our new CEO will be Ken Lay, who will bring a heightened, refreshing level of trust and cooperation between employees, investors, and management.
20) The executive team has reminded the employees that the future never looked brighter, and Haleos' success was never more certain.

opto 12/4/2012 | 10:49:01 PM
re: Haleos: Final Days? I was a competitor to Haleos. I heard many customers discuss them. It would seem their demise can be linked to doing some things really well, others not.

> most customers said they were strong technically
> most customers did not have bad things to say about their products
> they had a lot of customers
> their marketing presence was very good - they had high visibility, super website

> they ignored existing customers - most customers felt that their business was not important to Haleos, that Haleos must have other business that was much more important
> Haleos was doing nothing to fix it's relationships with existing customers -> they were either unaware of the problems, or impotent to fix them

Lessons learned:

> Know your customers well, know what they are saying about you, and fix it immediately if it is not positive: You cannot afford to have even one customer saying bad things about you. Haleos did not keep their customers happy - they made good product (no one said anything bad about the product). Yet once they had a customer, they would basically ignore them, even though it was clear that they had the know-how to make the product
> Build key strengths carefully: instead of focusing on the hard work of banging out good product day in and day out, they kept going after greener pastures of one new product after another, never getting to the point when they could profit from any one product line
zhadum 12/4/2012 | 10:49:00 PM
re: Haleos: Final Days? i am sorry - they didn't care too much for new customers either. when we tried to get them to build stuff for us, they touted their 40-50 customers and ignored us for months.

oh, well. this is what you get when you have no professional management.
Byte and Switch 12/4/2012 | 10:48:59 PM
re: Haleos: Final Days? "During the past six months we have conducted an extensive survey and key supplier selection process to support a very important new program that is entering the production phase this year. We took the opportunity to evaluate custom microdevice suppliers from around the world against an exacting set of requirements. Haleos was the clear winner in our selection process. We found a company with demonstrated tremendous potential to add strong value in our on-going new product developments."

Susan, MEMS Engineer

"Our delivery dates are respected and packaging standards meet our specifications. Haleos delivers consistent quality and always comes through to meet or even exceed our requirements and technical specifications (for quantity, technical difficulty, etc.).

"Haleos also has the capacity to meet our increased quantity demands, even with limited notice, and offers unsurpassed customer service and competitive pricing. We are fortunate to have Haleos as a strategic supplier and look forward to continuing our relationship."

John, Vice President, Engineering

Also from Haleos website:


Byte and Switch 12/4/2012 | 10:48:59 PM
re: Haleos: Final Days? "After much cooperation between our development teams, and a concerted effort to achieve our very unique requirements, we were able to launch our product which performed exceptionally. After the launch, our mutual goal was to establish a ramp in our manufacturing requirements with a consistent and highly reliable product. Haleos met the challenge not only from the R&D perspective, but also from an on-going manufacturing standpoint. Without hesitation, we can recommend using Haleos as a supplier of any highly technical or challenging product opportunity."

David, Program Manager

Also posted on Haleos webpage

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