Sycamore Networks headed to tech industry graveyard

Sycamore Networks (NASDAQ—SCMR), whose optical switches and telecom software have powered carrier networks around the world since 1998, says it is shutting down. The company is selling off assets of its Intelligent Bandwidth Management business to a subsidiary of Marlin Equity Partners and may sell off or liquidate its other assets, including its IQStream mobile optimization technology.

Sycamore, co-founded with MIT researchers by the well-known entrepreneur Desh Deshpande, went public in 1999 and reached a market capitalization of $18 billion. The company, oft-described as “once high flying” in its obits this week, now has a market cap of $166 million, and its stock price has fallen to under $6, whereas it once lived in the $20s and $30s.

Twitter this week is littered with farewells and sad good-byes from those who worked at or with the company. On a personal note, I recall Deshpande and CEO Dan Smith, along with colleagues, attending a monthly schmoozefest I used to run with a local VC at North Bridge Venture Partners and basking in the exciting growth local telecom and enterprise switching just before the dot-com bubble began to burst.

Years later, Sycamore was hit hard by the 2008 economic downturn and never recovered, piling up mounting losses, including nearly $13 million in fiscal 2012.

DEAD END: 2012 Tech Industry Graveyard 

FAMILY TREE: The story of Juniper, Sycamore and other tree-named networking companies 

It’s been a rough couple of weeks for Deshpande, who is chairman of Waltham, Mass.-based A123 Systems, the maker of electric car batteries that last week said it was seeking bankruptcy protection.

“After careful consideration of the Company’s strategic alternatives, we believe these actions are in the best interests of Sycamore’s stockholders, as well as its customers and employees,” said Daniel Smith, president and CEO of the Chelmsford, Mass., company. “We are pleased with Marlin’s decision to acquire our Intelligent Bandwidth Management business operations, which will provide for continued support of our global customer base.”

The company, whose technology is found in networks from Sprint to Vodafone to NTT in Japan, employed 250 as of this summer, according to an SEC filing. Marlin has said it will offer employment opportunities to most Sycamore workers who remain.

Network World tracked the goings-on at Sycamore closely as the company during its early days addressed the need by carriers for big bandwidth. It boasted in 2000 of technology that would enable carriers to turn up optical circuits for customers in seconds rather than weeks or months. The company also rolled out products designed to enable carriers to slash the price of optical network services. 

But all that wasn’t enough to sustain Sycamore in a competitive market that has also left others that started up around the same time, including Juniper Networks, efforting to thrive in a competitive carrier equipment market involving U.S. and overseas companies.

Bob Brown tracks network research in his Alpha Doggs blog and Facebook page, as well on Twitter and Google +.