Telecom infrastructure maker Ellacoya Networks has laid off 50 employees, nearly a quarter of its workforce, because of
lagging orders.
Less than six months ago, the Merrimack, N.H., startup banked $52 million in venture financing and went on a hiring spree. But potential customers for its switching
systems have curtailed major purchases until the economy recovers.
“We’re facing very difficult market conditions,” said Mike Weltz, an Ellacoya spokesman. “We’re making the company right-sized to adapt to the elongated sales
period.”
The cuts came in all departments. The action will allow the company to reach break-even by the end of 2002 and shouldn’t interfere with customer service, Weltz
said.
For Ellacoya, the reductions are the first bad news in an otherwise charmed existance. Last year, it raised a total of $86 million in private investments from Goldman,
Sachs & Co, Lightspeed Venture Partners, Centennial Ventures and Lighthouse Capital Partners and others.
In February, it scored a coup when it hired Ron Sege, president of U.S. operations
for Terra Lycos, as its CEO. The 43-year-old said he looked forward to building the startup into a major player.
Ellacoya’s hardware and software switching systems, which are currently in testing, enable carriers to deliver revenue enhancing services such as streaming video and
teleconferences.