For telecom start-ups, it is Bestimmungsort Deutschland!

Germany might not be a tourist destination for Americans, but for the head-honchos of optical start-ups it is Bestimmungsort Deutschland! And then they have to perfect the art of how to grovel in German! With European networking giants like Alcatel, Siemens, Ericsson and Nokia being the only guys with any semblance of stock as currency, it is no surprise that most start-ups are looking at Europeans as their white knights. Nokia came to the rescue of Redback Networks, only a few weeks ago, buying a ten percent stake for a measly $36 million. Sigh! What a telecom depression can do to a company’s stock price!

Siemens’ recently threw ailing Sycamore Networks a lifeline when it decided to resell Sycamore’s optical switches. With most of its customers going the way of the dodo, it was going to be lights out for Sycamore sooner or later. Sure it was sitting on about a billion dollars in cash, but how long does a billion last these days. Siemens wanted to buy the Chelmsford, MA-based Company, but in the end price was the issue. Dan Smith, who sat on the board of Unisphere, a router company, which was snapped-up by Juniper Networks for $740 million in May 2002, (Siemens got 9.7 percent of Juniper in return) must have liked what Siemens’s sales force was doing for Unisphere, and decided that a sales-deal might be a better option than selling out outright! So for now Sycamore is an optical switch company. But don’t rule out a complete buyout. German giant’s Optisphere group is a bit moribund these days, and tattlers in the networking world say that remnants of Optisphere might soon move up to Chelmsford!

Talking about optical switches, Oceanport, NJ-based Tellium Inc has been sending its executives to Bonn, Germany so often that airlines are fighting for business. Tellium-drones (and a couple of queen-bees) have tried everything ? discounts, tears and even, oh well ? in order to get that elusive order from Deutsche Telekom. Understandably so, after all Tellium has only three major customers ? Dynergy, Qwest and Cable & Wireless ? and two of the three are in financial dire straits. No wonder Tellium is desperate, and DT knows that, and is looking for some steep discounts on that $11 million box Tellium expects to sell. Of course, given the credit unworthiness of DT these days, the whole discussion might be moot soon. A soft whisper from one of our sources tells us that is precisely the reason why Tellium announced lay-offs on June 24th.