LaserComm's Workers From Mars Quietly Disperse

LaserComm has fired the last of its 20 workers in Israel and closed down its Tel Aviv offices, according to employees

LaserComm has fired the last of its 20 workers in Israel and closed down its Tel Aviv offices, according to employees.

This comes about one year after LaserComm, which has developed a solution for chromatic dispersion in optic fibers, fired 50 of 70 employees.

The company apparently has retained its staff in Texas.

Sources close to the company said LaserComm is the case of a firm who let its market slip away. The company was considered very promising: Since its establishment in late 1997, LaserComm had raised a stunning sum of $77 million from investors.

No comment could be obtained from the company this week.

Chromatic dispersion is a problem that has plagued the optic communications industry. Different colors comprising the light - i.e. wave signals of diverse lengths - move along fibers at different speeds and "trample" on one another. The start of one pulse is disturbed by the next, making it hard to distinguish between them. This results in slower data transmission speeds, because the optic fiber's full potential cannot be realized.

In February 2001, LaserComm co-founder Yochay Danziger told Haaretz that when he established the company, it was unclear what the firm would produce. "We went to conferences around the world searching for ideas," he said. "One of the suggestions was to handle the problem of managing chromatic dispersion, but we placed the idea close to the bottom of the list."

But the idea resurfaced in March 1998 due to an optic communications conference. After hearing a talk on the subject, Danziger and fellow co-founder Eduardo Shoval talked with the lecturer, an official from Lucent, and asked his opinion of the chances of a company that tackled the problem. "The guy looked at us as though we'd landed from Mars, and said that chromatic dispersal was the biggest problem facing optic networks in the years to come," Danziger said.

LaserComm developed a box that connects to optic fibers, at every 100 km, and corrects the optic dispersal. Some 160 people in Israel developed the solution, while the company employed 40 more at a production line in Texas.

The company's last financing round, which brought it $21 million, came in January 2002. However, by then it was clear that it had a problem: Its valuation for the round was only $100-120 million, and shortly after financing was completed, it fired 15 percent of its staff.

LaserComm backers included Israeli funds Cedar and Giza, as well as international institutional investors such as Piper Jaffray, VantagePoint Venture Partners, GE, Morgan Stanley and CIBC.

By mid-2002, LaserComm had fired 130 employees, blaming the cutbacks on the crisis in the telecommunications industry and lower-than-expected demand for its products by the major phone companies, which had slashed their procurement.

In 2002, the company negotiated with four potential buyers for its technology, including Ciena and Nortel, but no deals were signed.

In May 2002, LaserComm dismissed 30 more people, all in the United States, and a month later, Shoval stepped down. By January, the company was down to 20 people. Even though the firm still had $8 million in its kitty, which could let it operate two more years, according to a source close to the firm, its shareholders apparently have run out of breath.