Soapstone on Slippery Slope?

Soapstone Networks Inc. (Nasdaq: SOAP), the former Avici Systems, announced today that it's looking into options that could be as drastic as a selloff of technologies or a complete shutdown.

The decision was driven by a need to get cash back to shareholders, CEO Bill Leighton said in the company's press release. Soapstone has enlisted Morgan Stanley to help sort the possibilities. (See Soapstone Seeks Options.)

Some of the options listed aren't so dire, such as a cash dividend or a stock repurchase.

But the possibility of closing or selling off the company looms large. Such moves would put an end to the long struggle that began with Avici entering the core router market, then later offering up control-plane technologies. (See Avici Abandons Routing, Targets PBT, The Core Was Rotten for Startups, and Soapstone Shores Up Ethernet.)

Last week, Soapstone announced plans to trim full-time staff by 10 percent and contractors by 75 percent. Soapstone had 79 full-time employees as of Dec. 31, 2007, according to SEC filings. (See Soapstone Reports Q4 .)

Founder Larry Dennison left the company late last year for his next startup, Lightwolf Technologies, a move that now looks like an ominous bit of foreshadowing. (See Soapstone Shocker: Founder Flees, Larry Dennison: He's Baaaaack!, and Thinking Virtual With Larry Dennison.)

— Craig Matsumoto, West Coast Editor, Light Reading

hyperunner 12/5/2012 | 4:11:16 PM
re: Soapstone on Slippery Slope? I always thought it was a shame that Avici didn't make it as a credible third supplier in the core router space. From what I can tell the product seemed to work.

Thank goodness for Juniper is all I can say, but two choices just isn't enough!

I must admit though that I never really understood the Soapstone business model. So in that respect this is no surprise. As in all these cases, whatever we think about the merits or otherwise of the company or their products, my thoughts are with the unfortunate folks who are losing their jobs.

Pete Baldwin 12/5/2012 | 4:05:33 PM
re: Soapstone on Slippery Slope?

From Soapstone's earnings call last week, further layoffs: another 40 % of headcount got reduced in April.

Relevant page of Seeking Alpha's transcript:


The call also mentions headcount being cut 58% total since restructuring started.  Soapstone actually got up to 152 people at the end of 2008, according to the 10-K, so that puts them at around 63 people -? (Just a back-of-envelope calculation, no guarantee of accuracy.)



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