re: Ciena Cuts 1/4 of StaffWell, can't say I'm overly surprised by Gary Smith's latest move. SJ was filled with H1-Bs anyway.
But what continues to surprise me is that instead of looking at miproving fundamentals - beefing up the sales teams, improving products, etc - Mr. Smith chooses instead to find short-term solutions such as cutting heads and buying revenue through poorly thought out acquistions!
When will the Wallstreet/share holders wake-up and throw this guy out?!?
(ps: "Sources close to Catena and Internet Photonics" just screwed what little optical opportunity Ciena had in the market, what a joke!!)
re: Ciena Cuts 1/4 of StaffYou know what they say about Nortel alumni. You can take the idiots out of Nortel, but you can't take the Nortel out of the idiots.
Anyone else see any parallels between Ciena's post apolocolyptic strategy and Nortel's. Only thing that's missing is the accounting scandal.
there was a great company in San Jose, Alantec, who was bought by a "high flying" East Coast (sort of...) company, FORE. FORE did the same with Alantec, as Ciena did with Lightera and ONI, killing a great team and the follow-up products. To make-up for the blunder, they then bought a disastrous company, Berkeley Networks. FORE is now history, acquired by GEC-now Marconi. Due to this acquisition Marconi almost went out of business...
Sorry for the long post, but...
I can see why you might have that impression of the FORE/Alantec acquisition. While I agree that East Coast/West Coast acquisitions never work (look at Bay Networks), the Alantec and Berkeley situations were a bit more complex. Let me offer an alternative perspective as a proud ex-FORE person.
-Back in 1995 FORE made pretty good ATM switches and adapters. They were the best on the market at the time, and they were getting better. ATM was a hot technology and the company was on a roll. But remember those switches were enterprise-focused and enterprises were about to go Ethernet in a big way.
-In fact it was clear to FORE management that the world was already seeing the benefits of Ethernet. But for some reason every time FORE did something with packets, rather than cells, it turned out bad. Prior to GÇÖ95 FORE was OEMGÇÖing a dreadful box we called the LAX-20. CanGÇÖt remember who actually made it, but it was an appalling piece of junk. Then in GÇÖ95 FORE acquired a Layer 2 Ethernet switch from a MA-based company called ANT. Since ANT was a startup the product clearly didnGÇÖt work. But for some reason FORE management was surprised by this, and mis-managed the GÇ£fixingGÇ¥ of the ANT box (which became known as the ES-3810). Also the ES-3810 was a pure Layer 2 box, and so there was a hole in the IP to ATM story. (Note, eventually the ES-3810 became the most reliable and functional Ethernet/ATM Layer 2 box IGÇÖve ever seen, but it took a heck of a lot longer than it should have done). Note that there was never a 2nd generation ES-3810 box developed.
-A major UK customer of FORE (who were suffering badly from exposure to the LAX-20) mentioned that they thought that the Alantec boxes were hot stuff. Next thing we know, FORE is buying Alatec for some outrageous price, and trying to get a decent ATM interface into the platform. I think Alantec had built an ATM uplink for the box, but it wouldnGÇÖt have been as good as a home-built FORE interface. No other company made decent ATM interfaces at that time GÇô that was one of the reasons for ATMGÇÖs downfall actually. And FORE were as bad with Ethernet as they were good with ATM.
-Now the Alantec platforms were pretty good in their day, but that day was well past by the time FORE acquired the company. Everyone else was using ASIC-based designs, while the Alantec boxes were still built from older components, with less integration, lower density, higher cost and less reliability. Plus the Layer 3 stacks on the Alantecs werenGÇÖt all that stable.
-Since FORE already owned the best independent IP stack in the industry through its acquisition of Rainbow Bridge in 1995, the sensible thing to do would have been to commit to a next gen Alantec Powerhub platform that integrated the Rainbow Bridge IP stack, and the FORE expertise in ASIC development (up to that time, FORE had never spun a bad ASIC). From a bean-counter perspective I suspect that would have been unacceptable. The pressure was on to keep EPS rising every quarter, so that was not what FORE did.
-Instead FORE went out and made the single most disastrous acquisition in their history GÇô Berkeley Networks. At a time when Ethernet meant cheap, simple and reliable, Berkeley built a box that was expensive, complex and (thanks to its Windows NT operating system), VERY unreliable. In addition, Berekely management ended up de-railing a very successful marketing strategy that FORE had up to that time (Networks of Steel), replacing it with Application Aware Networking.
-The one asset that Berkeley did bring to FORE was their Marketing VP, Donal Byrne. With his Irish charm, Donal was a key factor in FORE being able to convince GEC to pay $4.5B for the company a couple of years later. By then FORE was really struggling, and the world had definitely said GÇ£noGÇ¥ to ATM in the enterprise. The motley selection of Ethernet products in the FORE inventory couldnGÇÖt compete with the likes of Cisco, Extreme, Foundry and even other acquisition cock-ups like Bay Networks. (Note for those who arenGÇÖt aware, GEC changed its name to Marconi after the acquisition of FORE and various other high tech companies in 1999).
-As a point of economics, it was not the $4.5B price tag paid for FORE that scuppered Marconi. That was the going rate for acquisitions at the time, and there were other bidders at the table. The problem was that GEC paid CASH, not stock. The reasons for this are complex, but the result was that when the industry went through an equity erosion two years later, the price paid for FORE (and other acquisitions) looked bad on the books.
-IMHO, FORE was a great acquisition for GEC. The problem was that Marconi never did anything with the product line. As soon as the acquisition completed there was a diaspora of talent out of FORE (all their options were cashed out), and so no experienced engineers were left to maintain existing products or develop new ones. It took ages for Marconi to fix that problem, but by then it was irrelevant because carriers had stopped buying anything.
-IGÇÖve said in the past on these boards that IGÇÖm no big fan of acquisitions. The only people who seem to benefit are the people with stock options they can sell.
-So donGÇÖt blame FORE for killing Alantec, Alantec was already terminal by the time the acquisition happened. DonGÇÖt blame Marconi for killing FORE, because the same was true. And donGÇÖt blame FORE for killing Marconi, because the real problem was a combination of reckless business practice by GEC, followed by a market collapse.
re: Ciena Cuts 1/4 of StaffGary continues to blame all but himself. In normal companies, you are measured by your performance and get promoted or fired based on your results. Ciena's board operates like they are from Supermans "Bizarro" world..."sales are down and we are losing money at a steady rate...lets vote to give ouselves bonuses and more options while the stock price is tanking and hopefully the rest of the market will pick up and increase our value".
re: Ciena Cuts 1/4 of StaffI have yet to understand why fellow engineers always want to play the victim in a company’s demise. I always read comments when there at least is some discussion about how the product had problems (it’s never perfect). It’s your responsibility to perform your own due diligence on management and the product’s market potential and see if you believe in both. If you don’t, you deserve whatever results you get from your management. Even if you do believe, there is still no guarantee for success.
Any professional athlete does the same thing. Why would a superstar go play for a poor coach, unless his/her pay is significantly more than any other offer?
The problem is that engineers want the safety of a Fortune 500 with the upside potential of a startup and this doesn’t work. Only 1 in 1000 startup companies make it, so why are you so negative about your company failing/struggling? Get over it and accept it. It’s the nature of startups. Go work for GE if you want a cushy job.
If you don’t like your management, then show them by leaving or even start your own company if you have the balls to do it!
re: Ciena Cuts 1/4 of StaffIn the case of the post's read here, I would agree.
Ciena's CoreDirector and ONLINE products are mature and do not need the massive amount of labor that was employed in San Jose, EVEN if they are engineers, PERIOD. By the way, when was the last time you read anything NEW coming out of this location?
From a pure business standpoint they (Ciena Exec's) probably should have let half this group go a year ago so the labor pool in the valley wouldn't be inundated, but that's another issue.
Turning to aquisitions, I think some fairly good points have been raised regarding their acquisitions. I am not knowledgable enough to comment on the strategic value of the Catena or IP acq's. Which leads me to my next point.
I can say for certain that their approach to integrating acquisitions seems better now then when ONI was acquired.
My experience is that they "had" a conquering approach that stamped out all competing ideas/processes for the sake of their already existing one's regardless of how superior the competitors were(note, Ciena had good ones too). This caused the east coast/west coast blame game.
Lastly, another difference could be that some impediments to progress i.e., some hard-headed and long-term Directors and VP's were riffed in the last round and this seems to have made a difference, IMO.
re: Ciena Cuts 1/4 of StaffGeoff, The common denominator in the FORE story is their bad, bad management. Yes, the engineering part of the business was superb, but the management was one of the worst I have seen in my life: -The first, CEO-Cooper, was a professor at CMU, and other execs were new graduates -The next CEO -a bean counter and the newly promoted engineering vp-a customer service ex-manager, a clueless egotistic character, were only preoccupied by their number of shares (they got millions for themselves, right before the GEC acquisition). All managers brought by FORE to the Alantec division, were very, very bad. Alantec, as well as ANT, were so mismanaged that entire groups of people walked out the door, and some, founded other successful start-ups. PowerHub had a couple of ASICs, and two follow-up L2-L3 products, some in advanced stages of development were canned, one for the disastrous GB switch from Berkeley NetworksGǪ Ethernet products were completely deemphasized by the sales force, trying to promote their ATM centric vision of the world, thus destroying the customer base brought on board by Alantec. Anyhow, what happens to the ONI and Lightera people, now, reminded me of the sad story of Alantec.
re: Ciena Cuts 1/4 of StaffGeoff, Well stated, and very accurate history. I still have to shake my head over the gross mismanagement and the inevitable slide down to "perdition". It's a case study that should be a required course in a good B-school!
re: Ciena Cuts 1/4 of StaffMy experience is that they "had" a conquering approach that stamped out all competing ideas/processes for the sake of their already existing one's regardless of how superior the competitors were(note, Ciena had good ones too). This caused the east coast/west coast blame game.
But what continues to surprise me is that instead of looking at miproving fundamentals - beefing up the sales teams, improving products, etc - Mr. Smith chooses instead to find short-term solutions such as cutting heads and buying revenue through poorly thought out acquistions!
When will the Wallstreet/share holders wake-up and throw this guy out?!?
(ps: "Sources close to Catena and Internet Photonics" just screwed what little optical opportunity Ciena had in the market, what a joke!!)