Zaffire Fires 20% of Sales Team
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