Optical telecommunication equipment maker Sycamore Networks Inc. is halting development of optical transport devices and will cut approximately 235 employees in a reorganization, the company announced.
Sycamore, in Chelmsford, Mass., will focus its business on optical switching products and integrate transport and transmission capabilities into its switches instead of selling stand-alone equipment, the company said in a statement. The downturn in investment by telecommunication carriers forced Sycamore to make the move, the company said.
The optical network equipment industry was hit hard beginning in late 2000 after carriers overbuilt networks for demand that has not yet been realized.
Sycamore will stop development of its SN 8000 and SN 10000 standalone transport systems and focus its resources on the SN 3000 and SN 16000 series of optical switches. As a result, the company will restructure its operations and consolidate its engineering organization. The work force will be reduced by approximately 235, the statement said.
The cuts will represent a workforce reduction of about 35 per cent and the company expects to complete them by the end of this week, according to spokeswoman Lucia Graziano. The company had 665 employees as of April 30, the end of its fiscal third quarter, and expects to have 430 at the end of its fourth quarter, on July 31.
The moves will result in costs ranging from US$45 million to US$55 million but will result in quarterly cost savings of US$15 million to US$18 million starting from Sycamore’s fiscal first quarter of 2003, which begins Aug. 1, Graziano said.
Sycamore also announced a partnership with Siemens Information and Communications Networks, a unit of Munich-based industrial giant Siemens AG, in which Siemens will resell the company’s optical switches around the world. The companies also will work to integrate products and network management, Sycamore said. The companies will work together to market Sycamore’s SN 16000 switch and integrate it with Siemens’ TransXpress Infinity long-haul transmission gear, SDH (Synchronous Digital Hierarchy) systems and network management systems worldwide. The agreement is not exclusive.