Dado Chops 20% As ADSL Falters At Ikanos

Ikanos wrote down $12.9M of ADSL chips. Sales Q3 will be down 22% or more from $55.6M in Q2. 20% of employees are on the way out. Dado Banatao, legendary chip entrepreneur now in control of the company, has brought in new management from SiRF, another Tallwood VC portfolio company.
Dado is now a VC looking for a way out of a troubled investment. He pointed out on the call that "VDSL is a growth segment." He sees the future of the company as highly differentiated next generation products. He expects revenue from bonded DSL in 2011, with both the U.S. and Asia interested. Dado claimed "Our vectoring is beautiful compared to our competition," but like then-CEO Mike Gulett he did not provide enough details to confirm that. Dado doesn't expect vectoring out of the lab until 2012.
New CFO Dennis Bencala is blunt."ADSL is a declining market. We have decided not to participate in RFPs that do not meet our requirement for margins." That's possibly true on the CO side, but most of the 5.8M new broadband customers in China needed ADSL modems.
China's adding fiber, but they will require millions of DSL chips every quarter for a long time.
John Quigley, who joined in June, will take over as CEO and Dado will remain in charge for Tallwood Capital. Michael Kelly and Jim Murphy are also coming from SiRF.
October in Paris at the BBWF, Ikanos will be joined on a panel by AT&T, Swisscom, and Alcatel. Good time to get more answers.Written by Dave Burstein

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