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Financial

ONI Slims Down

ONI Systems Inc. (Nasdaq: ONIS) said today that it is laying off 16 percent of its staff and is eliminating bonuses for its managers in order to conserve cash in a rapidly deteriorating economy.

The company's CEO, Hugh Martin, and COO, Rusty Cumpston, are also cutting their own salaries to $1 a year, each. The company is telling its remaining employees to forfeit a week's pay by taking a mandatory vacation during the fourth quarter of 2001.

The company informed its employees of the layoffs yesterday afternoon and it began to let staff go this morning.

The first news of ONI's layoff was published this afternoon when Light Reading ran a transcript of an audio recording of Hugh Martin that had been originally posted on the company's private intranet. ONI has confirmed that the recording was legitimate.

ONI won't say how many employees are affected by the layoff, but the number could be anywhere from 100 to 125 people, given the company's most recent published headcount of 776 employees as of June 2001.

Table 1: ONI Systems � Historical Headcount
Date # of Employees
December 31, 1999 202
December 31, 2000 541
June 30, 2001 776
Source: SEC filings


"We are structuring the company for the future," said Martin on the audio recording. "We will be one of the survivors. And what's the foundation for survival these days? It's cash. Therefore, we've built a business plan that provides cash for four years with a minimal revenue forecast. To do this we need to structure the company to run efficiently on the revenue we can actually see. And so we are sizing all areas of the company that are revenue- or infrastructure-related, to have visible revenue forecasts."

Martin told Light Reading this afternoon that the revised business guidelines mentioned in the message to ONI's employees would help the company stay conservative in regards to its sales outlook by not relying on deferred sales to make its quarterly numbers. ONI will address more specifics about its restructuring during the company's earnings conference call on October 23, Martin says.

Late last month, ONI announced that it expects to see revenues in the range of $40 to $50 million for the third quarter ending September 30, 2001, down from its earlier guidance of $75 to $80 million.

The areas where ONI will increase spending include research and development and adding to the company's sales force that focuses on Regional Bell Operating Companies (RBOCs).

"For those of you who leave, I'm sorry. I hope that ONI treated you well and helped you grow. You will be missed," Martin said to ONI employees. "For those that stay we have an even greater responsibility to do everything we can to make our company the most successful it can be."

- Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
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horse of a different color 12/4/2012 | 7:42:51 PM
re: ONI Slims Down You said..."This is an example of great leadership in action!"

Is that "in action" or "inaction"???? Seems to be a lot of that going around lately...

Da Horse
optical 12/4/2012 | 7:42:51 PM
re: ONI Slims Down This is an example of great leadership in action!
poster 12/4/2012 | 7:42:50 PM
re: ONI Slims Down yeah that spectacular leadership that sat around for months maintaining, or better yet raising, guidance - continuing to spend money and hire staff - while the entire market melted down around them. real visionaries.
optical_enthu 12/4/2012 | 7:42:42 PM
re: ONI Slims Down does anybody have any idea from which department the people have been laid off ?
sandiego 12/4/2012 | 7:42:40 PM
re: ONI Slims Down What a sorry lot! The guys at GE and IBM have cash, these little weenies are nothiong short of comical. Big brazen Gilderian lightwave entrepreneures -- counting how many more months they can cover their mortgages and kids' tuitions out of company coffers before bailing out.
Can anyone seriously expect any of these optical startups to produce anything of value -- to themselves, their shareholders,or posterity -- a la Bell Labs?
switchrus 12/4/2012 | 7:42:40 PM
re: ONI Slims Down "Can anyone seriously expect any of these optical startups to produce anything of value -- to themselves, their shareholders,or posterity -- a la Bell Labs?"

You bet your ass these guys are going to succeed! If you donGÇÖt believe in yourself, then who else will.

To all the startups, guys and gals with an idea, give it a go! He who tires and fails, at least they tried, better than some clock watcher at a Fortune 500 company listening to their arteries harden!

Give them HELL !
fk 12/4/2012 | 7:42:39 PM
re: ONI Slims Down I have to commend him on his words for the faithfully departed.

Better than his words to those that remain. "There's a mandatory 1 week vacation for all employees in Q4. That means you're going to lose a week of pay." That's no vacation. That's a furlough. And who wants to place money that there will be pressure on employees not to take the actual time (or somehow make it up). Why not just be honest and tell the survivors they are getting a pay cut?
betteroff 12/4/2012 | 7:42:39 PM
re: ONI Slims Down Wannabe Chambers is following in the $1/yr footsteps of John, but I have to commend him on his words for the faithfully departed. At least that was more than batman and robin, I mean Desh and Dan from Sycamore gave their employees. Some say that they were found hiding in the stock room until the last employee was escorted out by security guards no less.
davey59 12/4/2012 | 7:42:36 PM
re: ONI Slims Down Gee, sounds as though you've been burnt by a startup in recent times. Whats the problem? You don't seriously think all startups (optical or non-optical) are going to have bad ideas, do you? By the same token, you don't expect all large, multinational companies (or even worse, Government) to have the monopoly on good, sucessful ideas? Yeah, a lot of startups will fail, probably 90% in any business, and the number of bad managers far outweigh the good. But the 'badness' comes not from greed or hubris but from inexperience. ONI are doing the right thing, conserve cash (cash is King in any business), cut expenses and push sales force. The cuts are not too deep (yeah, I know, tell that to the laid-off employees) and I am sure they will ask more of the employees who still have a job. But what is your alternative, just give up on any idea you have because its not going to work? Go and find yourself a nice 'cozy' spot in a Government lab my friend, and wait out your time until you shuffle off this mortal coil. Tell that to Edison or Bell or Tesla, Marconi, Gates, Jobs............
getoutahere 12/4/2012 | 7:42:35 PM
re: ONI Slims Down You mean all 776 employees are your personal friends???

-- I was refering to all (5) of my friends.

What about the >50% who joined after the IPO and who found themselves under water by a significant amount on their options after the market crash?

-- Stock options are a risky proposition.

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