A spokeperson for US telecommunications equipment company Lucent today confirmed the reports that Israeli company Chromatis was being closed down. Lucent bought Chromatis last year for $4.7 billion in a share swap deal.
Chromatis is firing its 150 employees, 130 of whom are in Israel and the remainder in Virginia. The spokesperson said that the announcement was only being made now, several days after rumors of the closure spread, and after a conference call was held with analysts on Thursday, because Lucent wanted to inform its employees and customers first.
Lucent announced on Thursday a new wave of cutbacks in the company, in which 17,000 employees will be laid off. In contrast to earlier assessments, the company did not say it was planning to freeze Chromatis's activity. Lucent acquired the Israeli company for $4.7 billion in shares over a year ago. After posting a $428 million write down for Chromatis R&D, Lucent is still reporting an almost $4 billion value for the company in its books.
Chromatis products were meant to complement Lucent’s old line of metro optic network products for Internet communications within urban areas. Lucent said at the end of last week that it was planning to continue to invest in metro networks, but did not disclose any decision on the activity.
Chromatis was set up in 1997 by Rafi Gidron and Orni Petruschka. A month ago, the company dismissed 20 employees due to financial difficulties.
Published by Israel's Business Arena on 27 August, 2001