Optical components

Lightwave Microsystems Reincarnated?

The ghost of Lightwave Microsystems may be about to come back from beyond the grave.

When, in late September, the startup officially closed its doors, and put its fabrication facility up for sale on Dovebid, things looked pretty final (see Obituary: Lightwave Microsystems). But apparently not.

According to a reliable source close to the company, Lightwave Microsystems is about to be reborn. "The facility was not sold and has not been broken up," wrote a source in an email to Light Reading. "The team did not disband. Other than a new name and some new investors, Lightwave will continue to sell products and to lead this sector of the market (such as it is)."

Startup NeoPhotonics Corp. -- which, like Lightwave Microsystems, is developing Arrayed Waveguide Gratings (AWGs) and related components -- was rumored to have been negotiating to buy the assets of the defunct company (see Has Lightwave Micro Found a Buyer?). One source suggested the price was as low as $2 million, although exactly what NeoPhotonics was getting for its money wasn't mentioned -- the deal could have been for the fabrication facility only. NeoPhotonics declined to shed any light -- it continues not to return calls.

Last week, NeoPhotonics spun out its non-telecom-related business, which may signal a change in strategy resulting from being the reincarnation vehicle for Lightwave Microsystems (see NeoPhotonics Spins Out Medical Biz).

Drew Lanza, a founder of Lightwave Microsystems, couldn't comment on any possible deals. But he set the tone in a post to Light Reading's message boards: "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…" (For the rest of Lanza's illuminating post, see Happy Thanksgiving!)

— Pauline Rigby, Senior Editor, Light Reading
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fulgurator 12/4/2012 | 9:09:54 PM
re: Lightwave Microsystems Reincarnated? Practically, capitalism is about how your going to make money. How you made (lost, spent, ...) money in the past is now just politics.

Lichtverbindung 12/4/2012 | 9:09:53 PM
re: Lightwave Microsystems Reincarnated? I can appreciate that the former Lightwave engineers get praised for their achievements but I find it difficult to give kudos to a management team (including Mr Lanza) for the most dramatic failure of all in the Valley i.e Not selling your startup while you have customers, products and suitors.

Talk about lack of business acumen !!
Think about it, even Murali was able to sell Scion to JDSU and it was not worth 10% of Lightwave.

Bad job Mr Lanza
Lichtverbindung 12/4/2012 | 9:09:50 PM
re: Lightwave Microsystems Reincarnated? Mr Lanza,
I did not mean to attack you personally, you seem to be a great guy to work with and have good ethics for all I know.

I just wanted to make the point that no matter how great your product, your engineers and no matter how much you are having you should not lose track of the business responsibility of your job.

Your engineers did not have the visibility you had in term of customers, revenue and burn rate.

At the time JDSU was shopping for Scion, it should have been pretty apparent to you that your business model would fail and that you should sell the company. You did not and that was the wrong business decision.

Good luck in your next enterprise.

Drew Lanza 12/4/2012 | 9:09:50 PM
re: Lightwave Microsystems Reincarnated? Ouch! That's pretty stinging criticism.

Sorry to disappoint you guys, but we do it to build great companies. If we can make a lot of money doing it than we are doubly blessed.

I know you may find this hard to believe, but it's true. In fact, part of the reason we're so screwed up right now is because a lot of people did it just to make money and that greed has helped to destroy a large part of the optical telecom food chain and has tarnished Silicon Valley's image.

I'm a second generation Silicon Valley entrepreneur. My father didn't do it because of the money. He did it to build a great company.

The old line VC's who built the Silicon Valley, folks like Draper, Edwards, McMurtry, Dennis, and Morgenthaler will all tell you they didn't do it for the money. They did it to build great companies. I believe them.

And I never did it for the money. I always felt that if we built a great company than the money would follow. Truth is, if we had sold Lightwave Microsystems two years ago it would have been shut down by now (guaranteed). I would have walked away with $20-30M. Do I look back and kick myself? Hate to disappoint you, but no, I don't.

If we had sold it only to see it shut down, then I wouldn't be able to show my face in this industry that I've been in for almost 20 years. The team is still together as is the fab. Lightwave lives on. There's a lot to be said for building something of enduring value.

Are the investors disappointed? Sure they are. But they wanted to build a great company, too. They were all solid investors and I'm proud to have been associated with them.

Maybe I should just shut up, lick my wounds and move on. But I'm very proud of the ethics and accomplishments of Lightwave Microsystems. If all of the companies in this sector had been as straight and true as Lightwave we wouldn't be in the pickle we're in.

And that's worth defending.

Drew Lanza
lastmile 12/4/2012 | 9:09:48 PM
re: Lightwave Microsystems Reincarnated? Drew,
It is strange that a person like you has to go through the turmoil of responding to so many people (like me) who have never been a part of the optical industry.
Your experience of 20 years has given you the ability to respond to garbage with a kind of explanation that only experienced vetrans can express. Someone suggested that you should have sold your company at the right time!
That is junk. If I had sold my fiber optic stocks at the right time then I would (as an investor) never would have had a chance to participate in this discussion.
Fiber has a tremendous future. It is bandwidth and that's it. Just 2 years of bad time does not mean that the world is over.
I sincerely wish you success and I would request you to avoid responding to trash.
LifeIsGood 12/4/2012 | 9:09:48 PM
re: Lightwave Microsystems Reincarnated? I have read with interest some of the posts on this thread. Let me first state the obvious: cost reduction without compromising performance is the engine that will drive the optical networking industry in the next phase of growth.

The biggest drivers of cost are the capital equipment dollars and the head count. Based upon some idea of their equipment set - LMS is not best-of-class in this area. The headcount at LMS when they shutdown was staggering given the total available market - again I would not classify them as best-in-class in this area. I am sure that the management had its own reasons for this - however, I am not sure that this burn-rate was sustainable in context of the total available market.

I would reiterate the same thing I did previously: the optical components market isrelentless in the way it weeds out winners and losers. Ultimately, the market will decide who the major players will be. It will be interesting to see how this unfolds.

Lichtverbindung 12/4/2012 | 9:09:46 PM
re: Lightwave Microsystems Reincarnated? Lastmile,

On behalf of the laid-off employees at LMS, thanks for your immense wisdom.
I hope your investment in optics is worth more than my LMS stock.

Accept this small advice from a "trash" sender, check that the team managing your investment is not just a bunch of bright techies and has some business sense.

redface 12/4/2012 | 9:09:45 PM
re: Lightwave Microsystems Reincarnated? Drew Lanza stated:
"The team is still together as is the fab. Lightwave lives on. There's a lot to be said for building something of enduring value".

Mr. Lanza, you should be reminded that the team will disband soon when NeoPhotonics integrates with the former Lightwave team. I don't think NeoPhotonics has enough cash to pay all 240 people of the Lightwave team. Probably less than 30 out of the 240 will stay and you know it. So please don't list the furloughed team as one enduring value. As for the fab, you wouldn't want to list it as one enduring value, would you?

"Are the investors disappointed? Sure they are. But they wanted to build a great company, too. They were all solid investors and I'm proud to have been associated with them".

I think the investors are not that proud to be associated with you because you have failed them. You talked about building a great company as though it was your highest priority. Your highest priority should have been shareholder value. Your investors were not rewarded at all for investing in Lightwave Microsystems.

On the other hand Lightwave Microsystems probably has a very impressive customer list and it is something to be proud about. Maybe it is because of this impressive customer list, you and other Lightwave management team thought you could get another round of funding without laying off people and you were surprised when it did not happen.
PLC_guru 12/4/2012 | 9:09:43 PM
re: Lightwave Microsystems Reincarnated? True, LMS was able to development many nifty PLCs that actually worked and had excellent performance and I complement them for this "sucess".

But are these results alone a real measure of a sucess?

I've know the staff at LMS for many years and I know much of their orgainzation. They have (had) an excellent engineering team, but anyone could develop top-notch PLCs if they had > $160M and all the engineers and equipment they could ask for.

The true measure of a sucess is creating a company that can deliver "results" with a reasonable budget and staff. These are the "true" measurement of the effectivity of the management and, hence, the real measure of sucess.

lastmile 12/4/2012 | 9:09:38 PM
re: Lightwave Microsystems Reincarnated? Lichtverbindung
I must aplogise for my comments. As an outsider I was not aware of the internal affairs at LMS.
I arrived at a conclusion based on the fact that each and every fiber company (not just LMS)is going through a tough period.
Please excuse my ignorance.
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