Light Works

 
 
By eweek  |  Posted 2001-02-12
 
 
 

Since Christmas, network equipment companies have announced layoffs affecting 27,000 people, but the optical sector is still expanding quickly.

Network firms are slashing jobs in unprofitable sectors — unprofitable because the products are past their prime or because others built them better or got them to the market faster. At the same time, at least a half-dozen optical equipment companies — from high-flying Juniper Networks to discount king Extreme Networks — are confident enough about expansion plans to talk about them.

Some companies are hiring and firing simultaneously. Nortel Networks expects its overall number of employees will remain unchanged in 2001, but said it will eliminate some 4,000 current full-time positions, while hiring about that many to help it address the high-growth optical markets. The company added about 11,000 jobs in 2000.

Corning said it will eliminate all 354 temporary jobs at its optical component plant, but expects its photonics business to grow between 75 percent and 90 percent, and to hire about 800 salaried workers by years end.

"I certainly dont think weve seen the end to these layoffs," said Grier Hansen, an analyst at Current Analysis. "The cash isnt flying. Carriers are going to follow through with full network build-outs, but its going to take longer."

DellOro Group predicts that the market for core routers will grow from $2.5 billion last year to $5 billion or $6 billion this year. Last November, Infonetics Research, a market research firm, predicted carriers and service providers would spend about $42.5 billion on networking equipment in 2004, a 220 percent increase from last year.

That hasnt stopped some big equipment companies from cutting back. Lucent Technologies, which plans to trim 16,000 positions, looms over the layoff picture. Motorola and 3Com have also announced major layoffs.

Meantime, Ciena has gone to court to prevent its former employees from working at Chromatis Networks, ONI Systems and Sycamore Networks for the first year after leaving. Ciena expects to hire 30 people per week through 2001.

Avici Systems, competing with Cisco Systems and Juniper in the high-speed backbone router market, is "continuing to grow as fast as possible," said Esmerelda Swartz, vice president of marketing at Avici. "Its difficult to find the right people." Avici grew from 230 last July to 370.

"Its a space where carriers have to spend," said Carl Showalter, vice president at Juniper, which is expecting to double its employee base this year from the roughly 1,000 at present. Juniper grabbed a 30 percent share of the core router market last quarter, making big inroads into Ciscos lead.

Sycamore and Tellium continue to hire optical engineers, and both are readying to move into new, expanded facilities.

Riverstone Networks, a spin-off of Cabletron Systems that is planning a highly anticipated initial public offering, has tripled in size since last March, from 150 employees to 450, and expects to add about 25 employees per month.

Extreme Networks, striving to be the price leader in Level 3 switches, expects to grow from 924 people today to about 1,300 by the end of this year.

Scott Clavenna, director of research at Light Reading, sees a shakeout. "There are too many optical companies right now," he said. "A lot of these companies just had too easy a time getting money with shoddy business plans and untested technologies. Even some of those with good technology made a bet on the wrong solution."

Rocket Fuel