Allegro slashes staff

Edge router startup Allegro Networks Inc. has cut 46 employees, or about 30 percent of its workforce, to reduce its burn rate.

Allegro CEO Dave House Monday notified staff that the workforce would be reduced from 155 to 109 in order to reduce the company's expenses, prepare for another round of funding and respond to extended evaluation and sales cycles among incumbent local exchange carriers and interexchange carriers.

Most of the cuts have come from Allegro's sales and marketing ranks, says David Ginsburg, vice president of marketing.

"We've realigned our field organization to maximize resources into key accounts," Ginsburg says. "They require a much more technical field organization so there's been almost no reduction in (software engineers)."

The layoffs will conserve cash into the first quarter of 2003, Ginsburg says. Allegro will embark on its Series C fundraising this fall.

Ginsburg says he does not know the amount of additional funding Allegro will seek.

Allegro's multirouter - a device that supports multiple logically and physically independent routers within a single system - has been in lab trials for a couple of months with one carrier, Ginsburg says. Allegro expects to release additional units to other carriers shortly, he says.

Sources say SBC and Sprint are two carriers evaluating the multirouter, which can house up to 30 routers in a single system to support applications such as "real" private networks, rapid router deployment, and router outsourcing and wholesaling. The system supports up to 43,000 DS-1s, 1,536 DS-3s and 512 OC-3s in a seven-foot rack, according to Allegro.

Ginsburg says SBC and Sprint have not yet taken delivery of a beta unit.

WorldCom was also evaluating Allegro's multirouter, but the carrier's accounting scandal has likely postponed or canceled any equipment purchase and deployment plans.

Allegro was founded in January 2000 and has raised over $89 million. Investors include Bessemer Venture Partners, Thomas Weisel Venture Partners and Columbia Capital, among others.

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