Over the last 18 months, Tellabs Operations Inc. has been a microcosm of the changes many large OEMs have dealt with over the last year. The maker of communication-infrastructure equipment has dealt with an acquisition, both buoyancy and battering in the stock market, an increased reliance on remote design sites, and the impact of globalization.
Tellabs (Lisle, Ill.) began the year with a merger that expanded its market and beefed up its engineering staff. But then Tellabs tried to buy Ciena Corp., and the high-flying company became a corporate roller coaster.
Shortly after Tellabs offered $7 billion for the maker of wave-division multiplexing gear, a key customer announced that it would no longer buy Ciena hardware. Instead, it decided to switch to one of a few heavyweight competitors that crowded into the market, at about the same time the deal was being put together.
Ciena's stock price submarined, pulling Tellabs down with it. The deal was scuttled in September, timed nicely with a market downturn, slashing Tellabs' market capitalization from $17 billion to $6.5 billion. Unlike many companies, Tellabs didn't even try to hide the fact that this turmoil was unsettling.
Chuck Daugherty, Tom Ryan and Chris Strumbris keeping plenty of balls in the air as Tellabs goes international. They've learned how the stock market can change employee conversations at the designer level to issues normally left for corporate brass.
"When our stock got chopped by two-thirds, it changed our focus," said Chuck Daugherty, senior member of the technical staff at the digital-systems division. "Everyone was concerned about where we would go from there. We started analyzing products in the pipeline, wondering if they were what the customers would want. There are a lot of questions when your company gets obliterated on the market. For us in engineering, it was like a traffic accident: It's a distraction as you go by, but it's not a major issue that impacts what you're doing and where you're going."
Tom Ryan, VLSI design group engineering manager, added, "After the initial announcement of the deal, people were trying to figure out how to integrate their technology with ours. There was a lot of time wasted on that, as it turned out. Other than that, the biggest difference was that all our hallway conversations for a while were about that instead of other things."
Well before the aborted Ciena deal, Tellabs did acquire Coherent Communication Systems, a maker of echo-canceling equipment. When that deal was announced, it was a surprise on both sides. Chuck Gritton was chief technical officer at Coherent, so he was in the "inner circle" that worked on the deal almost from the start. That didn't make the Tellabs offer any less surprising.
"Coherent was in fierce competition with Tellabs, so the idea that one of our major competitors would buy us was quite a shock," said Gritton, chief technical officer at what's now Tellabs' Nets Division (Ashburn, Va.). "Since Tellabs was a competitor, we couldn't communicate clearly, and that led to some tension. But when they named this a center of excellence and said it would be the home for the division, things quieted down a lot. Then people started to worry about their specific projects. But there were regular updates and the only cuts were a couple in sales, so I think everyone is pretty happy now."
Throughout the uncertainty some engineers moved ahead nonplussed.
"Most of us in engineering felt secure in our jobs," said Chris Strumbris, a mechanical design engineer who designs backplanes. "Once the Coherent deal was done, it was interesting for us to meet our counterparts at the other company, our new group. We talked a lot about what tools they used and how we could develop a common technology. Now we're doing a lot more remote development, with different sites working on the same product . . . You have to be networked with your design tools and have the same CAD programs."
It isn't only the new company with increased interest in networked development. Remote sites set up by Tellabs are now being linked, and a Finnish company acquired a few years ago is forging closer ties to its U.S. parent.
"The folks in Finland have developed products for Europe, where the markets and the technology are different," Ryan said. "But now there's an emphasis on global planning and organization. There's an advantage in finding commonality between the products, and we're definitely moving that way."
The Internet and Intranets are obviously key tools for this increased global interaction. Documentation is one of the items posted on many of the Intranet sites, and it provides a way for the designers to look at their counterpart's work or products and see how they are put together. E-mail is also used heavily, but it can't replace face-to-face communications. For that, Tellabs employees like to use the telephone.
"We've got videoconferencing at all our sites. It's very handy," Ryan said. "The meetings are fairly focused on an agenda, but there's a much better chance to get to know people and interact than if you use the phone without video. There's the illusion that you're making eye contact, even if there is a delay. At least you know they're in the room looking at the camera, not reading the newspaper. A lot of the time one side will have to wait for someone, or one group can't get the camera to work right, so there's a chance to break the ice a bit."
These constant changes are part of what has kept Ryan, Daugherty and Strumbris at Tellabs for 13, seven and 10 years, respectively. Change, and a popular corporate intramural sports program with games after work. In an era when employees seem to switch jobs fairly regularly, they are pretty content to stick with their current employer, even when the stock got hammered.
"The company is growing at 35 percent, so there are a lot of opportunities," Strumbris said. "Our chief executive officer is an engineer, and he pushes an entrepreneurial culture, so we get a lot of say."