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Optical components

Gemfire Burning?

7:20 PM -- We're hearing from multiple sources that Gemfire Corp. is in trouble. The optical components hopeful definitely appears to have shut down its Livingston, Scotland, facility, according to the Daily News and this BBC report.

Some tipsters have suggested Gemfire is dead for good, but one source has heard it's a temporary shutdown, with operations halted for two weeks while Gemfire wraps up negotiations with potential buyers.

CEO Rick Tompane didn't immediately return a call requesting comment.

What makes this surprising is that Gemfire raised some substantial funding last year. (See Gemfire Lights Up $37M.) But with at least 250 employees -- that was the count in Livingston, the reports say -- its burn rate isn't exactly skimpy.

If the closure theory is correct, it could be a byproduct of the economy. It's possible that even with customers and orders in hand -- the Livingston factory was apparently well booked up -- the investors simply decided to call it quits and take back the remaining cash. That's idle speculation, of course, at which your humble correspondent excels.

Livingston, meanwhile, seems none to happy about the way things were handled. Member of Parliament Jim Devine is giving out quotes like this one, from the BBC report: "I spoke to the chief executive and he happily told me that UK laws were a lot looser than in America and their advice from their QC was tell the staff they have to go."

The Daily News adds a personal touch from a supervisor: "It is heartbreaking. People were gobsmacked and a lot of the girls were breaking down and crying."

— Craig Matsumoto, West Coast Editor, Light Reading

gbmorrison 12/5/2012 | 3:27:43 PM
re: Gemfire Burning? Yes that's what I was thinking, lawsuits fly and someone gets the good assets for 10-20 cents on the dollar.
^Eagle^ 12/5/2012 | 3:27:43 PM
re: Gemfire Burning? If Gemfire is in this situation, what happens with COVEGA? I know Covega is much more conservative in terms of cash burn than the Gemfire side and that Covega has good business flow and is running multiple shifts for it's modulator line, but given the two companies have merged and co-mingled their finances and management, this could seriously impact Covega and Covega customers. I know Covega would have never made the merger if not for Gemfire's 37M that was in theory to extend the runway of the combined company.

If that money is gone, I smell a bonanza of legal action.

Also, seems like a chance for more industry consolidation.

Sailboat
gbmorrison 12/5/2012 | 3:27:43 PM
re: Gemfire Burning? I have no knowledge of the contracts and mechanics of the $37M round but there is some chance that the $37M was just a 'capital commitment' and Gemfire couldn't call it from Centaurus in particular. They have been a poster boy for months for a troubled hedge fund facing big redemptions and throwing up gates to keep investors in. If Gemfire didn't get all their money at the time of the round closing, I kinda doubt they'd be able to get it all now.... Thus it would not be that Gemfire burned through the $37M they had in hand, but rather they could not get further access to that capital (or any other?).
Vent 12/5/2012 | 3:27:41 PM
re: Gemfire Burning? This has implications for all the non public companies that are still burning cash.
If funds are pulled which is easy to do as trances of funding are often linked to targets which give a get out of jail clause to the funds.
What happens now to the othe component companies e.g Neo Photonics, Cy optics should be Ok as they have just got 20M$ from Pirelli.
In public companies Avanex has started burning cash again and it won+át be long before bookham bleeds. As no company wants to buy (no cash) lets leave the consolidation and talk of going out of buisiness and leaving the field for those who still have cash to burn.
zeolite 12/5/2012 | 3:27:33 PM
re: Gemfire Burning? I find it strange that the press have been slow to pick up on this Gemfire story. They have treated their employees very poorly. The UK employees in particular have all been made redundant with no notice period given and no redundancy package. They are getting away with murder.
Balet 12/5/2012 | 3:27:01 PM
re: Gemfire Burning? It looks like Gemfire did not open the doors today.
Sorry for strongKymata engineers and managers, hopefully we can hire some of them.
As to Covega, they have never been profitable and would not be till they add more products to their portfolio and diversify markets, I think.

Best luck to Gemfire folks in this difficult job market.
Vent 12/5/2012 | 3:26:49 PM
re: Gemfire Burning? If your burning cash- You are dead
Consoldiation is not going to happen we are now going to see both start ups gemfire-covega etc and public companies (Avanex, Bookham)that are still or will be burning cash will fold followed by asset picking as some of the technology is picked up.
There is no sense investing in something that will continue to lose money or buying to consolidate (and paying for the restructuring) when the assets can be picked up later for cents on the dollar. The companies left will be glad to get rid of some competition without spending.

Vent
fusionboy 12/5/2012 | 3:26:49 PM
re: Gemfire Burning? Looks like there are a few employees left at Covega. Enough to mop up but not enough to process orders or deal with product. They still hold out hope - but does anybody else?
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