RiverDelta Cuts 20 Percent of Staff

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Next-generation cable-modem-termination-system vendor RiverDelta Networks
Inc. handed out pink slips May 18 to about 20 percent of its staff, or about 50
employees, a company official confirmed Tuesday afternoon.

One industry analyst said the layoffs at RiverDelta were yet another sign
that the CMTS sector is sailing on some extremely choppy economic seas.

RiverDelta vice president of marketing Jeffrey Walker said the cuts impacted
several company departments, but the Tewksbury, Mass.-based company's sales
department was hit the hardest. Following the layoffs, RiverDelta still had a
bit north of 200 employees, he added.

Walker said the move was necessary to keep expenses in line with slow market
conditions. 'We needed to ensure that we have a strong, viable company moving
forward ... [which] will shorten the time to profitability for us,' he
added.

Despite rumors that RiverDelta has had difficulty obtaining more funding,
Walker said the company is in the final stages of its third round, which should
be completed sometime after next month's National Show. RiverDelta raised
roughly $46 million during its first two investment rounds.

RiverDelta has assured its customers that it will be able to deliver on prior
commitments despite last week's staffing cutbacks, Walker said.

One of those commitments is with Insight Communications Co. Inc., which
announced earlier this month that it will deploy RiverDelta's 'Broadband Service
Router 64000' in Lexington, Ky., as part of a plan to offer
virtual-private-network and tiered high-speed-data services to residential and
business customers.

Cuts at RiverDelta only mirror the sluggish conditions that exist for both
start-ups and deeply entrenched incumbents that live in the CMTS sphere, noted
Gartner Group Inc.'s Dataquest Inc. broadband-communications senior analyst
Patti Reali.

According to her projections, 2001 CMTS revenues will be hard-pressed to
match last year's $638 million. Even market-share leader Cisco Systems Inc. saw
CMTS revenues dive almost 50 percent during the fourth quarter of last year,
Reali said.

'It will be a stretch for [CMTS revenues] to reach even $450 million this
year,' Reali said, adding that cable operators are getting better at
understanding their high-speed rollouts, allowing them to better spread out
their CMTS purchases.

Reali said another CMTS start-up that could be fighting for its financial
survival is Cadant Inc., based in Lisle, Ill. Cadant officials were not
immediately available for comment.

Despite RiverDelta's recent cost-cutting moves, Walker said the vendor still
plans to exhibit at next month's show with a large, 30-foot-by-40-foot booth.
'We're not going into hibernation,' he added.

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