Movaz Moves Up

Movaz Networks Inc. has emerged from beta tests of its optical transport switch and is set to start gathering revenue within the next three months, the company announced today.

Movaz is announcing general availability of RAYexpress, an 8-wavelength optical add/drop mux for small central offices that handles Sonet/SDH and gigabit Ethernet traffic in metro applications and supports Multiprotocol Label Switching (MPLS).

The startup says it's got five trials in place for this product, two in the Asia-Pacific region and three in North America. In Europe, a carrier is running live OC48 (2.5 Gbit/s) traffic to two Swiss banks using Movaz's gear. Neither this customer nor the prospective ones can be named, says CEO Bijan Khosravi.

"We are in later-stage negotiations with five of these carriers. We expect to start generating revenue from all of them within thirty to sixty days," he says, asserting that the sixth European carrier is already generating revenue for Movaz.

Khosravi says Movaz's other key platform, the RAYstar, a 320-wavelength box with dynamic routing and switching, is going into beta trials this month.

The news is like other Movaz announcements -- brash and well timed. After emerging from stealth mode last summer with news that it had its components covered (see Movaz on the Move), the firm wasted no time broadcasting its alpha trials (see Movaz Completes Alpha Trials) and making a big noise about its $92 million funding at SuperComm (see Movaz Makes a Splash).

Subsequent announcements have included a manufacturing deal with outsourcer Flextronics International (Nasdaq: FLEX) (see Movaz, Flextronics Power RAYs) and an agreement to purchase tunable lasers from Bandwidth9 Inc. (see Movaz, Bandwidth9 In Tune).

But the ongoing market downturn has taken its toll on Movaz, just as it has on the rest of the optical world. Khosravi confirms that the startup's taken steps over the past couple of months to reduce its sizeable burn rate and preserve its cash.

Movaz employees, including management, have taken salary cuts -- up to 20 percent for the most highly paid. Expenses have been slashed, resulting in some canceled prototypes. Many contractors that started with the company weren't kept on once their work was complete.

And about 3 to 5 percent of the fulltime staff has been let go. Movaz now has 245 fulltime employees and roughly 20 to 30 contractors, says Khosravi, who was once VP of marketing for Siara, a startup acquired by Redback Networks Inc. (Nasdaq: RBAK) (see Redback's Khosravi Question Answered).

There have been other disappointments. A lab trial at Genuity Inc. (Nasdaq: GENU), which was a pivotal claim in Movaz's SuperComm campaign, has come to naught. Khosravi isn't talking too much about that.

But he knows that the next six months will decide Movaz's fate. Much depends on the outcome of the present trials and on the success of the RAYstar, set to be the company's high-end flagship.

Khosravi's planning for success. The layoffs and other cost-cutting measures have had the desired effect, he insists, and the company can count on having plenty of cash "through the second half of 2002." Despite the recent layoffs, Movaz is hiring salespeople for its North American operations. Sales in Europe and Asia will be handled through resellers.

Movaz also has taken steps to get its Osmine certification from Telcordia Technologies Inc. (see Telcordia's Osmine Goldmine). And unlike other startups that acknowledge "biting the bullet" to get past the Osmine ordeal, Khosravi says he's thrilled with it. And he's got a typically spunky claim: An upcoming announcement of GMPLS-compatible software, he says, will give Movaz some needed traction with RBOCs and prove Telcordia to be stronger than ever in the telecom management market.

Jawboning aside, Movaz is clearly at a crossroads. It's facing stiff competition from other startups, such as Edgeflow Inc., which appears to be gaining traction as well. The technical, financial, and organizational challenges are keen.

But Khosravi's got bravado to spare. "As the market shakes out, one or two will be left standing and will make it very big," he says. "We will be one."

— Mary Jander, Senior Editor, Light Reading

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