Cadant Gets Cash, Cuts Staff
Dealing another blow to an already tormented next-generation cable-modem-termination-system sector, Cadant Inc. said it has laid off about 15 percent of its work force.
Mixing bad news with the good, the Lisle, Ill.-based start-up also said June 1 that it secured a new round of financing and named a new CEO.
Cadant raised about $9 million in a financing round that involved its original investors (Venrock Associates, Access Technology Partners LP and Chase Capital) and a new backer, Worldwide Associates Inc., said Cadant director of business development Tom Ruvarac.
Cadant's first two financing rounds netted the company about $41 million.
Cadant, which was founded in 1999, said its most recent cash infusion will enable it to finish developing its next-generation CMTS, which is expected to reach production readiness sometime this fall.
In a news release, Worldwide Associates president George Grkinich said: "Cadant represents the future of the cable industry. We are pleased to provide the capital necessary to finalize product development and enter the market.
"As investors, we anticipate that Cadant will retain and accelerate its industry-leading technical position in the coming months."
Ruvarac said Cadant hopes to close a much-larger round of funding within the next four months.
About 23 workers were let go in the layoffs, he said, leaving Cadant with about 110 employees. The cuts mainly affected the marketing division.
The company's engineering and development group was untouched, Ruvarac said.
Cadant was the latest next-generation CMTS vendor caught in the middle of a cash crunch that has affected the entire telecommunications sector. In mid-May, RiverDelta Networks Inc., a start-up based in Tewksbury, Mass., laid off about 20 percent of its employees, paring down its total work force to roughly 200.
And the CMTS slowdown isn't affecting just cash-strapped start-ups. Gartner Dataquest senior broadband communications analyst Patti Reali has said the whole sector will have difficulty matching last year's $638 million in revenues.
When asked if the moves were designed to prepare Cadant for an acquisition by a veteran CMTS vendor, Ruvarac said: "There's always a possibility of a sale of the corporation if the correct offer comes in, but we're not purposely doing this to prepare the company for a sale."
He added that the company intends to complete development of its cable-network equipment, secure customer contracts and become a self-sustaining company.
"We're not in a fire-sale mode," Ruvarac said, noting that Cadant will exhibit at this week's National Show.
The funding was a vote of confidence in Cadant by its investors, said Ruvarac, who said it was done "to ensure that we continue to operate and complete development of our product through (DOCSIS) 1.1 qualification."
Cadant's flagship product is the C4, a carrier-class CMTS/router combination based on Data Over Cable Service Interface Specification 1.1. Cable Television Laboratories Inc. is currently testing that product as part of its "ongoing" round of 1.1 testing. The current round, certification wave 18, is slated to end June 15.
Cadant currently has chassis in lab and field trials with a number of U.S. and international MSOs, said Ruvarac, but he wouldn't be more specific. He said the company might address that subject through some announcements, even prior to the National Show.
Ruvarac would not say how many C4 chassis Cadant has shipped to date.
In a June 1 press release, Cadant also said it named Charlie Walker as its new CEO. Walker, who has sat on the company's board for about six months, officially assumed the CEO reins May 29, Ruvarac said.
Most recently, Walker was with J.P. Morgan Partners. Before that, he worked for Access Technology Partners, a West Coast venture-capital firm and a Cadant investor.
Despite the soft economy, "Cadant will be making several significant partnership and product announcements [in the coming weeks] that will strengthen its position and illustrate why it will be a very successful enterprise," Walker said in a press release.
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