Luminous Loses Its Luster

Ethernet equipment vendor gives pink slips for Christmas

Phil Harvey, Editor-in-Chief

December 27, 2005

3 Min Read
Luminous Loses Its Luster

After more than seven years in business and more than $183 million in funding raised, it's lights out at Luminous Networks Inc.

Light Reading has learned from several Lumnious staff members that the company handed out final paychecks yesterday [Ed. note: Like, happy holidays, you guys!] and is making plans to try and sell its intellectual property.

Employees that spoke with Light Reading on the condition of anonymity are glad something decisive has happened to Luminous, but they're angry at the company's board and management for not taking advantage of chances to sell the company earlier in its history.

"I'm glad there's some closure, but beyond that, there's not much nice to say," says one employee. "We had second-tier VCs and that's what happens when you deal with dumb money."

The company's CEO, Chris Stark, didn't immediately return calls seeking comment. Employees say Stark, a Dallas resident and former Alcatel (NYSE: ALA; Paris: CGEP:PA) executive, commuted back and forth to the company's Cupertino, Calif. headquarters and was not on hand yesterday when the employees got the news.

A complete shutdown seems odd for a company that just talked up being funded a few weeks ago. But what happened, sources say, is that Luminous failed to meet certain revenue goals specified by its debt holder, Hercules Technology Growth Capital , as a condition of getting at a large chunk of the funding it was expecting.

Hercules announced in October that it had provided Luminous with $7.5 million in debt financing during the quarter that ended September 30, 2005. Representatives from Hercules had no comment on Luminous when contacted by Light Reading on Tuesday afternoon. The company is also an investor in Ikanos Communications Inc. (Nasdaq: IKAN) and Occam Networks Inc. (Nasdaq: OCNW)

In its earliest days, Luminous was one of the pioneers in the resilient packet ring (RPR) space as a creator of metro core platforms designed to give Sonet-like features and protection to Ethernet-based rings. (See Luminous Networks.) In recent months, the company had joined several of its competitors in the Ethernet transport space in a race to provide features for VOIP and video applications at the network's edge. (See Luminous Thinks Small.) In between, it received support from the likes of Ciena Corp. (NYSE: CIEN), but that vendor didn't ante-up for the most recent Luminous round, sources say. (See Ciena Links Up With Luminous.)

And Luminous had some customers to speak of. It had somewhere around 50 carrier customers, including Smart Telecom plc in Ireland and China Netcom Corp. Ltd. (NYSE: CN; Hong Kong: 0906) in Shandong (ed.note: snicker). But, one long-time employee says, Luminous partner Scientific-Atlanta Inc. contributed more than 60 percent of its revenues during the past few quarters. (See Scientific-Atlanta Invests $10M in Luminous and Luminous Touts Customers, Products.)

When Scientific-Atlanta sold itself to Cisco Systems Inc. (Nasdaq: CSCO), a Luminous competitor, the company's executives began to furiously look for an exit strategy, employees report. (See Cisco to Acquire Scientific-Atlanta.)

— Phil Harvey, News Editor, Light Reading

About the Author(s)

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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