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DWDM

Zaffire Fires 20% of Sales Team

Cappuccino? Bagel? Pink slip?

Zaffire Inc., a startup DWDM company, laid off 11 sales people this morning, after flying them into the company’s San Jose headquarters from around the country to get the bad news in person.

According to sources close to the company, employees had a meeting with the director of human resources at 9 AM PST and by 10 AM had already been given their final paychecks and their expense checks. As part of the layoff, they were also given one month’s severance and their existing shares were vested through the end of 2001, sources say.

Zaffire CEO Jim Fultz confirmed that 11 sales people -- or 20 percent of the sales staff -- had been let go in an effort to "refocus" the company. Fultz explained that in the seven weeks he had been acting as CEO he and Jane Christ, the new VP of sales, had analyzed the financials of the company and determined that the sales force was too large (see Christ Comes to Zaffire).

“We looked at where the market shifts were, and the sales team wasn’t to scale,” he says. “I was hired to do a job, and those who were laid off are not going to be happy about what I had to do. But I’m here to ensure the success of the company in the long term.”

Among those laid off were Joe Stanton, director of sales for the east coast, and Ron Wiles, director of sales for the west coast.

Zaffire officials emphasize that the layoffs are not indicative of any problems at the company, and Fultz himself promised that there would be no other dismissals. “Engineers were not part of this,” says Fultz. “The only group that wasn’t scaled correctly was the sales team.”

Even though the company has said that it hasn’t laid off any engineers, at least one optical engineer has left the company recently on his own account. Chao Xiang Shi, who was on Zaffire’s architectural team, left in December and went to Cyras Systems Inc. just before that company announced that it was being acquired by Ciena Corp. (Nasdaq: CIEN). Fultz and others at Zaffire played down Xiang Shi’s defection, stating that he did not hold a senior position on the development team.

And as some sales staff leave, others are being brought in -- primarily to focus on overseas territories. Just this week the company hired Joseph Parola as director of broadband cable sales. Seven more sales people are expected to come on board shortly -- with three working in Europe and four working in Asia Pacific, the company claims.

Zaffire also claims that it has had a very successful fourth quarter in terms of customer traction, reporting more than 14 shipments to 12 service providers. BroadBand Office Inc. (which also is an investor) is the only one Zaffire has announced (see Zaffire: 'We're not for Sale'). But the company says it plans to make more formal customer announcements next week at the Supernet show in California.

Today's news doesn’t bode well for the company, which has recently been plagued by negative rumors (see Zaffire Keeps It in the Family ). Fultz reiterates that the company is not looking for a buyer and is working toward a public offering.

“Time will tell our story,” says Fultz. “We have to run a business which is clearly focused on the public IPO, and these are things that happen as part of focusing the business to ensure success.”

-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com

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twistedcopper 12/4/2012 | 9:02:24 PM
re: Zaffire Fires 20% of Sales Team i actually believe that the cut in the sales force was an attempt to refocus, but i'm not sure that the company can go the distance either. i just don't see the market potential for the z3000 (a market that will grow from $110 million in 2000 to $940 million in 2004, according to pioneer consulting.... still miniscule when compared to the next-gen sonet market). i could see how the z3000 might be a product offered by a larger company, but i don't think zaffire can remain a stand alone company. i would be very surprised if they avoid acquisition (or go out of business).

anyone from zaffire post messages? i'd be interested in thoughts from the inside.

-twisted
Marguerite Reardon 12/4/2012 | 9:02:24 PM
re: Zaffire Fires 20% of Sales Team I'm interested in hearing what others think about this story. Do you believe Zaffire's claim that it's just cutting fat in the sales force to refocus the company or do people think that this is a symptom of a larger issue?
sunnyD 12/4/2012 | 9:02:24 PM
re: Zaffire Fires 20% of Sales Team zaffire is dead, i think. The amount of churn since its founding does not bode well for this startup. Too much refocusing every 6 months is a sign of trouble at the company. If they dont sell the company right now it will be too late for shareholders.
Give it a break!!! 12/4/2012 | 9:02:23 PM
re: Zaffire Fires 20% of Sales Team As an industry employee we are all concerned about 2001!
I highly doubt Zaffire is dead!

Dr. Near Margalit represents one of the greater visionaries in the optical transport industry.
Maybe after a few miss fires the Board of Zaffire has finally brought in a CEO who understands the fundamentals of running a business. I am impressed with what changes I have heard that Mr. Fultz has made.

I say let's give them a break and see what they can do with an already highly acclaimed technology and incredibly impressive group of investors that know great technology when they see it.

In my opinion they are more alive than ever!
Art van der Leigh 12/4/2012 | 9:02:21 PM
re: Zaffire Fires 20% of Sales Team I think that the jury is still out on Z. But look at some of the other box
makers out there who have no product to ships, no money and so so
engineering talent.... I hear their new top guns are shaping up house. Z
needs to close on some deals, if they do have good trails, there ahead of
many others. When you consider companies that are going through rough
waters, its all relative. Z is in much better shape than most.
rick 12/4/2012 | 9:02:21 PM
re: Zaffire Fires 20% of Sales Team all i hear about is what great technology zaffire has. and some strong
architecture and development talent. timing is everything. we will see.
test1234 12/4/2012 | 9:02:20 PM
re: Zaffire Fires 20% of Sales Team
Chaoshi?
What is Zaffire do that ONI and Ciena can NOT do?

From my research Zaffire has no additional value that others do not have, and I'm no amateur in this business.


--------------------
I believe that Zaffire has the best Metro WDM architecture on opitcal transmission aspects.
No body (includes Nortel, ONI, Ciena, Sorento ) can beat this architecture. Conventional Metro
WDM can not solve or only limitely solve Carrier's problems. This is why Zaffire still
has a great potential, even only talk about Z3000
-a pure transport layer solution (not mention of Z5000). I have been in carriers side for most advanced technology evaluation, and I saw so
many Metro WDM solutions. No one can easily beat Zaffire's optical architecture ( which I also
had most of my effor on developoing it). When
i was in Zaffire, I also talked to customers, I can very easily convince them the advantage of Zaffire optical architecture, and they agreed also. This is why many customers like Zaffire's solutions, actually, Zaffire is only choice for some of them, since other verdors can just not do it.

chaoshi 12/4/2012 | 9:02:20 PM
re: Zaffire Fires 20% of Sales Team I believe that Zaffire has the best Metro WDM architecture on opitcal transmission aspects.
No body (includes Nortel, ONI, Ciena, Sorento ) can beat this architecture. Conventional Metro
WDM can not solve or only limitely solve Carrier's problems. This is why Zaffire still
has a great potential, even only talk about Z3000
-a pure transport layer solution (not mention of Z5000). I have been in carriers side for most advanced technology evaluation, and I saw so
many Metro WDM solutions. No one can easily beat Zaffire's optical architecture ( which I also
had most of my effor on developoing it). When
i was in Zaffire, I also talked to customers, I can very easily convince them the advantage of Zaffire optical architecture, and they agreed also. This is why many customers like Zaffire's solutions, actually, Zaffire is only choice for some of them, since other verdors can just not do it.

opticalman 12/4/2012 | 9:02:19 PM
re: Zaffire Fires 20% of Sales Team I had the opportunity to meet the Zaffire sales team several months ago and was not impressed by their overall sales approach and demeanor. Although they had a promising technology, their sales team left me with the impression that they could not deliver effectively. These recent changes are a step in the right direction. Hopefully they can get their act together and hire the right type of people in sales. Sales is just as important as Engineering in positioning a startup company to the public. Can anyone say Cisco?
lightningman 12/4/2012 | 9:02:19 PM
re: Zaffire Fires 20% of Sales Team Zaffire is just going through some typical growing pains at present. It looks as though Jim Fultz is focused on making this company a success by delivering the right DWDM product at the right price point to the metro marketplace. 2001 will be a great year for this startup with the announcement of some significant customer wins. Stay tuned....
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