Crescent lops 66% of staff

Edge router start-up Crescent Networks has laid off two-thirds of its workforce in order to contain costs through the slump in the telecom industry.

Edge router start-up Crescent Networks has laid off two-thirds of its workforce in order to contain costs through the slump in the telecom industry.

The Lowell, Mass., company now has roughly 20 employees, according to President and CEO Gerald Wesel. The 40-odd employees that have left Crescent received their pink slips earlier this week, he says.

“We did have a significant downsizing of the company and we’ve done that to make sure that we can support our trials underway,” Wesel says. Crescent has trials in Europe, Asia and the U.S., he says.

Wesel would not disclose exact employee figures, nor would he reveal how much cash Crescent has or how long it will last. He says the company’s burn rate is “where it needs to be.”

The Crescent Web site states that the company has raised $66 million since its founding in 1999 and that it has 90 employees, which would indicate that Crescent quietly laid off staff previous to this week’s reduction.

Wesel says Crescent may be looking to raise another round of funding but he would not disclose a timeframe nor an amount. He also says Crescent is considering a partnership with a major telecom vendor in order to take its VRX-1000 Service Edge Router to market.

Distribution partnerships with larger, established telecom equipment vendors, underscored by an investment, are common among start-ups in today’s downtrodden market.

“Carriers have their favorite vendors that they like to purchase from,” Wesel says. “In one case, one potential customer said that they would be more than happy to facilitate and encourage that conversation. We’re actually going down that path now.”

Crescent has already lined up NTT-ME, an integration subsidiary of Japanese carrier NTT, as a distributor for the VRX-1000 in Japan. Crescent also has partnerships with vendors LuxN, Micromuse and SAN Valley Systems to market the router.

This week’s workforce reduction is due to the current slump in the market – initiated by carriers’ reducing their capital spending by almost 50% since 2000 – rather than any technical shortcomings of the VRX-1000, Wesel stresses. Crescent announced yesterday that BTexact Technologies, a testing arm of U.K. carrier British Telecom, gave the edge router high marks in scaleable routing protocol implementation, IP forwarding and rate limiting, and management and security.