North American telco market is dead, says Wavesat prez

TORONTO — Canadian wireless companies must whip their R&D departments into shape and look to Asia to survive the market meltdown, according to the president of Wavesat Wireless.

Mark Holleran, who said he was in the process of closing a $10 million financing round for the eight-year-old Montreal firm, discussed his secrets of survival at the monthly Toronto Venture Group meeting Wednesday.

Wavesat Wireless makes and sells orthogonal frequency division multiplexing (OFDM) modems and RF microwave amplifiers that used in the deployment of broadband wireless networks. Holleran, who spent 16 years at the former Digital Equipment Corp. and later ran Cabletron Systems of Canada Ltd., said the company has not been immune to the economic forces that have afflicted many other firms in the teclo sector. But in a speech that offered a point-form run-down of Do’s and Don’ts to managers in the audience, he said the best opportunities for future growth are not on this continent.

“The North American market is dead,” he said. “The only bright spot in telco right now is wireless. And the only spot there is in Asia.”

Wavesat already has 5,000 amplifiers in Korea, said Holleran, who says he travels for two-week stints to China at least once a month. “Have any of you seen Shanghai? Beautiful city. So many skyscrapers — it’s like an OFDM Nirvana.”

Holleran said he believes that OFDM will eventually outpace the current code-division multiple access (CDMA) technology, and is in the process of securing nine patents to assist the company in securing additional financing. This is important, he said, to nervous investors who have been burned by the bankruptcies of many startups.

“These are hard times,” he kept repeating, more than a dozen times. “It’s going to take you twice or three times as long to raise money . . . once you’ve got the money you’ve got the power, but it’s their money.”

Holleran said wireless vendors who expect to stay afloat in the current business climate must be prepared to communicate their vision effectively, and often. “You’ll do 100 presentations, if you’re lucky,” he said, adding that some VCs are more technology-savvy than startups might expect. For example, Skypoint Capital, which has worked with Wavesat, is lead by a former Newbridge Networks executive. “He can get right down into the nuts and bolts of what you’re doing . . . you’ve got to let them know the exit strategy. They want to know when they’re going to get their money back.”

Though he encouraged his peers to focus only on essential products and services, Holleran said the big challenge lies in making sure his research and development arm get those products get to market. That means setting a timeline, and sticking to it. “That was a shock to them,” he said. “It took six months, but they learned that every time they sat down in a meeting with me they better not open their mouth without a date.”

Keeping up morale is difficult in the downturn, Holleran admitted, but he emphasized the importance of staying focused on key objectives. “You’re going to hear the best sob stories in the world,” he said. “The terrorist activity’s a great one now . . . ‘I don’t feel well.’ Well, I don’t feel well, either, but we have to get the products out.”

The ongoing layoffs at many firms are part of a cycle that will eventually rebound, Holleran predicted, but until then he suggested companies run as lean as possible. “If it’s not essential, throw it out. Just throw it out!” he said. “It’s a lot easier to hire than to go back later and die by 1,000 cuts.”

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