PhotonEx Falls Into 40Gig Hole

PhotonEx Corp. is on the verge of becoming ExPhotonEx.

The company, reported to be closing several weeks ago, has filed for Chapter 11 bankruptcy protection (see Ex-PhotonEx? ). It's yet another high-profile crackup for a high-profile startup. PhotonEx, founded in 1999, claimed to be selling "the world's only commercially-available, field-proven," 40-Gbit/s, long-haul DWDM systems. The startup raised $178 million in three financing rounds. (See Photonex Has a 40-Gbit/s Idea, PhotonEx Set to Demo 40 Gig, and Photonex Scores Huge 3rd Round.) In the end, though, the company had between $1 million and $10 million of assets left to pay its debts, which add up to... between $1 million and $10 million. The bankruptcy paperwork also states that some funds will be available for unsecured creditors, of which there are more than 200. So where'd all the cash go? Some sources in the Boston area say PhotonEx hasn't exactly had a reputation for being frugal. "They liked to travel in first class," said one source. The company's creditors include chipmaker Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC); contract manufacturers Celestica Inc. (NYSE, Toronto: CLS) and Flextronics Corp. (Nasdaq: FLEX); analyst firms RHK Inc. and PointEast Research LLC; and, inevitably, the IRS.

From the beginning, the company had interesting technology that sounded almost too advanced for what carriers would ask for. "They need leap-frog technology that isn't so esoteric it scares off carriers," Scott Clavenna, then head of PointEast, now chief analyst at Heavy Reading, told Light Reading three years ago this month. Unfortunately for them, carrier budgets didn't allow for 40-Gbit/s systems nearly as quickly as the company had hoped. Sources say shortly after the company failed to get any part of the U.S. government's Global Information Grid Bandwidth Expansion (GIG-BE) business, its managers decided to wind down operations. — Phil Harvey, Senior Editor, Light Reading

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stillworking 12/4/2012 | 11:15:56 PM
re: PhotonEx Falls Into 40Gig Hole What is really sad is if 40g technology is not accepted or adopted here in the US, it will show in countries like China for example - real soon.
photons-r-us 12/4/2012 | 11:15:55 PM
re: PhotonEx Falls Into 40Gig Hole Its not sad at all. 40 Gb/s technology is not needed, what is needed is new, cost effective technology for 10 Gb/s.

40 G/s technology is one big R&D experiment, done in places like where the founders of PhotonEx came from. Get real.
yomama 12/4/2012 | 11:15:55 PM
re: PhotonEx Falls Into 40Gig Hole Serves them right, when I interviewed there, everybody seemed so smug and cold, like they were doing you a favor spending time to interview you, of course I never got a letter or a phone call informing me that they had passed on me.

Screw them!!!
busted 12/4/2012 | 11:15:54 PM
re: PhotonEx Falls Into 40Gig Hole hey yomama,

grumble, grumble, I'll bete those grapes were sour anyway.
glad2Bgone 12/4/2012 | 11:15:53 PM
re: PhotonEx Falls Into 40Gig Hole Yo - you are ABSOLUTELY RIGHT. I met some of these guys at some industry functions and they would kinda giggle amongst themselves over how incredible their product was. One quote was "we are setting new speed records every day" and they would laugh and high five each other. I asked them what the product was and it was "we can't tell you...just remember we are gonna be huge". Confidence and belief in what your doing is fine, but the "smug" line you put in your post hits it on the head. They had an air of superiority among them...regardless who they were talking to the conversation always went to "our product will set the market on its ear". This is proof positive that whatever propellerheads from MIT labs dream up doesn't always translate into a useful equipment.
captain kennedy 12/4/2012 | 11:15:52 PM
re: PhotonEx Falls Into 40Gig Hole I can tell you first hand that the engineering team was not smug, nor did they treat interview candidates poorly. However, I have heard of numerous accounts where the leadership was clearly drunk on their self-inflated impressions of the company and its product. The sad thing is many solid engineers will have to live down the impression set by the mighty few.
Lite Rock 12/4/2012 | 11:15:49 PM
re: PhotonEx Falls Into 40Gig Hole Piss and moan. Fact is they had some great folks and superior technology that was far ahead of the market.

Those great folks are finding homes with other companies now and I hope I get a chance to work with them in the future.

Between the Qtera folks and the PhotonEx folks I bet they come up with something that can sell into the current market. Too bad they have to do it in Boston instead of Boca!

It's all about the future. You look at it as a job and they look at it as an entrepreneurial opportunity. Not that they were superior, just different.

So does this mean the 40G consortium is dead? ;-)
glad2Bgone 12/4/2012 | 11:15:48 PM
re: PhotonEx Falls Into 40Gig Hole We differ in opinion on the engineers (I had the experience of being on the outside looking in, not being surrounded by arrogance) but the management/leadership thing we agree on. After the 80M round was landed, management told the team that they could survive well into 04 with the current headcount and no revenue....he was promptly RIF'd 3 weeks later and FORCED (i.e. no severance or other things unless he complied) to sell back the options he purchased. (obviously, that was a blessing looking at things now).
Dr.Q 12/4/2012 | 11:15:48 PM
re: PhotonEx Falls Into 40Gig Hole 40G is not commercially viable in this decade. CWDM is where the action will be, at 2.5G for smaller (capacity) systems, and evolving to 10G CWDM as we get system standards hammered out.

optical_leaders 12/4/2012 | 11:15:46 PM
re: PhotonEx Falls Into 40Gig Hole Who was first to market with a commercially available 40G product in both SDH and DWDM? - LU!
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