The Ottawa Citizen from Ottawa, Ontario, Canada • 42

THE OTTAWA CITIZEN BUSINESS THURSDAY, MARCH 28, 2002 Ghost: Power shift to U.S. Mitel reconnects with Flynn JL I i -vl -iyA "We chose Mitel Networks as a partner because they are able to provide a powerful combination of user-focused IP solutions (and) over 30 years of international industry expertise," Mr. Flynn said in the release. After the Alcatel deal, former Newbridge chairman Terence Matthews bought the Mitel name and traditional office telephone technology that made Mitel a strong second-tier supplier. Mitel is fighting for a piece of the new Internet-based office network business.

Sales tripled to $1 billion U.S. last year with Cisco System capturing a third of the market and Nortel Networks and Avaya Communications (a Lucent Technologies spinoff) splitting 40 per cent. Mitel said Damovo will sell By Bert Hill Mitel Networks is counting on a European distributor with strong ties to Ottawa to help sell new products. It said yesterday that Damo-vo, a European services company that was spun out of Swedish telecommunication-giant Ericsson, could sell new Internet-based corporate phone systems worth as much as $278 million over the next three years. What separates the announcement from the routine is the chief executive of Damo-vo: Pearse Flynn.

Mr. Flynn was the top Newbridge Networks executive who whipped the troubled organization into shape for sale to Alcatel, then led the transition before returned to his native Ireland. the new 3100 and 3300 Integrated Communications Platforms around the globe. Mitel chief executive Don Smith said "We must partner with services companies of the highest caliber." Steve Cramoysan, an analyst with the Gartner research firm, said in the Mitel release. "It is evidence that they are positioning themselves to take advantage of changes in the industry structure, which are creating opportunities for players such as Mitel to re-invent themselves." Damovo employs 2,700 staff with an annual sales of nearly one billion euros.

It was launched last September after Apax Partners paid $480 million U.S. for 80 per cent of Ericsson Enterprise direct sales and service operations. Juniper, Sonus issue sales warnings Continued from page Di In 1988, after an overly-ambitious acquisition spree, Lumon-ics was bought by Japanese conglomerate Sumitomo for $84 million. In 1999, at the bottom of another business cycle, it merged with General Scanning Inc. of Waterford, Massachusetts, in a $i65-million deal that created the second-biggest laser manufacturing equipment player in the world.

The deal was billed as a merger of equals, with corporate headquarters in both countries. But the real power increasingly shifted to the U.S. operations, where Chuck Winston, the chief executive at General Scanning and at GSI Lumonics, works. GSI will maintain an Ottawa presence at WavePreci-sion, a Nepean optical components operation, with about 90 employees. About 10 people involved in managing corporate Web sites, taxation and other functions will join them.

"I am very disappointed," Al Buchanan, a founder, former chief executive and director of Lumonics, said yesterday. "Lumonics created technology and creative jobs that were a value to the community. It shared profits and provided pensions almost from the start. It is a shame to see that tradition denigrated, in a sense." GSI vice-president Vic Wool-ley said the Kanta plant is operating at only about 50 per cent of capacity. GSI has already sold an Italian operation, closed plants in California and consolidated operations in New England.

Lumonics was founded in 1970 when Mr. Buchanan, then 42, teamed up with Gordon Mauchel and Alan Crawford to establish Lumonics Inc. They got a licence for laser technology developed in the Defence Research Establishment. They had worked at Leigh Instruments, a now-defunct military communications company, and at Computing Devices, now General Dynamics Canada, which has helped spawn many technology companies. "I had seen that a lot of success at Computing Devices was due to government licences for technology," Mr.

Buchanan said in a 1998 interview. "I thought that if it worked for Computing Devices, it could work for us." Lumonics co-founder and former chief executive Alan Buchanan, left, photographed here in 1984, says he's 'very disappointed' to see the company's tradition 'denigrated, in a Lumonics: Slump cent of its workforce in response to declining sales. Yesterday it was Juniper, the second-biggest maker of Internet routing equipment behind Cisco Systems. It chopped sales forecasts in the current quarter to $120 million U.S. to $125 million from the previous estimate of $150 million to $155 million.

It still expects to breakeven on an operating basis. "It's going to be ugly with a capital for equipment makers in the short term," said Kevin Risen, a fund manager at Neuberger Berman, which holds Juniper shares. Juniper's customers "have to improve their cash flow, so they're putting on hold as much capital spending as DON'T GO BRUNO SCHLUMBERGER, THE OTTAWA CITIZEN Nepean WavePrecision Inc. facilities. WavePrecision is a subsidiary that employs about 100 people designing and manufacturing optical components.

GSI currently has no plans for WavePrecision, which was spun off from GSI in January 2001. GSI also plans to keep its head office in Ottawa, despite having all of its key executives located throughout its Massachusetts facilities. The company was created when Ottawa's Lumonics Inc. merged with Boston's General Scanning Inc. in March 1999.

Lumonics was founded in 1970. The company is the latest organization to use such consolidation to save money. JDS Uniphase has taken a similar approach, consolidating all of its Ottawa operations into its Merivale Road facilities. airlines under one roof and common governance that will presumably let them co-ordinate schedules better and to conduct more cost-effective marketing. "With everything wrapped up into a nice neat package in a national network, it could make it easier for them to spin off some of the previous separate carriers into their own standalone entities." Ms.

Williams said spin-offs are not on Air Canada's current agenda. Jazz: Cost-effective marketing By Bert Hill Two promising telecommunications gear makers warned yesterday that they will miss sales forecasts by 20 to 30 per cent this quarter. Juniper Networks and Sonus Networks joined the chorus of bigger equipment makers sinking in the industry's growing sea of despond. Giants such as Lucent Technologies, which had to indefinitely postpone plans for a turnaround, and Ericsson, which said yesterday that markets are still cold, are racking up losses. Earlier this week Ciena, a nimble optical systems maker, said it would cut 22 per from $99 $104 One Way to Thunder Bay One Way to Sudbury 229 $249 One Way to Calgary One Way to Edmonton Continued from page Di With no end to the slumping economy in sight, GSI said, it must cut expenses by consolidating all of its operations into its facilities in Wilmington, Massachusetts, and Rugby, United Kingdom, to return quickly to profitability.

The company will now begin to separate its Ottawa operations into two divisions, the systems business and the laser components business. The systems business will be transferred to GSI's U.K. facilities, while the company's laser component business will be sent to the U.S. Between 50 and 60 Ottawa positions will be eliminated. Plans for the remainder of its no Ottawa employees are sketchy, but it plans to offer some of them employment in in the U.K.

and the U.S., or at its feature the Jazz logo and the Canadian maple leaf in one of four colours red, orange, yellow or green against the white body of the plane. And as of April 7, Air Ontario and Air Nova passengers at the Ottawa Airport will hear their flights called out under the Air Canada Jazz banner. Yet in Mr. Reid's view, the branding-campaign is but a riff within a bigger arrangement. "The real story here is strategy," Mr.

Reid said. "You've got all these regional it possible." Juniper chief executive Scott Kriens said: "People still want to buy stuff. They're just not able to do it in the timeframe they want." Sonus, a leader in the promising Internet-based telecom-muication sector, warned analysts to expect losses twice as high as the four cents per share they had been forecasting. It will take a charge of up to $10 million U.S. for excess inventory.

It expects first quarter revenue of $21 million, well below the consensus revenue estimate of $32.5 million. With files from Citizen news services i lt.i. wliric u'li Continued from page Di Air Canada Jazz will continue to provide about 800 flights every weekday to 80 Canadian and U.S. destinations, mostly with the same aircraft. The one exception will be the retirement of its fleet of Fokker F28S scheduled for the end of this year.

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