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Cisco leaves Petaluma
Last Modified: Thursday, November 5, 2009 at 12:45 p.m.
Cisco Systems has quietly closed its optical networking facility in Petaluma, joining the exodus of giant tech companies that have left Sonoma County’s once-bustling Telecom Valley.
With little fanfare, Cisco shut down its Petaluma division in July. Fewer than 100 workers were left at the facility when Cisco decided to close it, just a fraction of the number who worked there a decade ago when Cisco became the second-largest employer in Telecom Valley almost overnight.
Cisco moved into Sonoma County in 1999 when it paid $320 million for Fibex Systems, a Petaluma telecom startup. Four months later, it electrified the county’s tech sector when it paid a record $7.3 billion for Cerent Corp., a Petaluma startup with a clever idea that would help transform telephone networks into broadband superhighways.
The deal turned 200 Cerent employees into millionaires, spawned a new generation of startups in Sonoma County and validated Telecom Valley as a national hub for innovation.
By 2003, the San Jose networking giant would employ more than 500 people in Petaluma, including part-time and contract workers.
Today, the only visible evidence of Cisco’s presence is a small sign on the loading dock at the back of the building it once occupied on North McDowell Boulevard.
“Employees there were given the opportunity to continue their positions in San Jose or become remote workers,” Cisco spokeswoman Kristin Carvell said.
Cisco is the world’s largest maker of networking gear, including routers, servers, switching systems and storage technology. It has about $35 billion in annual sales and more than 65,000 employees worldwide.
But its optical networking business declined in recent years because of new competition, and it began to focus on other products, according to analysts.
In 2007, the business was reported to be for sale, but Cisco denied the reports.
“This is part of the evolution of Telecom Valley and the telecom industry,” said Ben Stone, director of Sonoma County’s Economic Development Board.
Since Cisco’s arrival, startups with new products have found success in Telecom Valley, he said. Former Cerent and Cisco executives started Calix Networks and Cyan Optics, two fast-growing companies that remain in Petaluma.
Cisco continues to sell the technology developed in Petaluma, the company said. The concept for the technology, first sketched out by Cerent co-founder Ajaib Bhadare on the back of a cocktail napkin at Applebee’s Neighborhood Grill & Bar in Petaluma, would become the ONS 15454, an optical networking platform that helped telephone companies deliver voice, video and data over their networks.
But the Petaluma division was targeted for closure in April as Cisco searched for ways to cut costs and refocus on new initiatives.
“Cisco continually evaluates its business to improve efficiency and ensure it is aligned to capture growth opportunities and drive key initiatives,” the company said in a statement. “Our Petaluma site is being closed as part of our continual business evaluation. Employees not impacted by the limited restructuring at this location will be migrated to other locations or have the opportunity to become remote workers.”
Cisco joins other big-name telecom companies that have left the county in recent years, including Nokia and Motorola. Most of Telecom Valley’s original companies have downsized dramatically since the technology crash of 2001.
But Cisco’s departure is an especially tough loss, said Saeid Rahimi, dean of the School of Science and Technology at Sonoma State University. Cisco was a strong supporter of the school’s engineering program, Rahimi said.
“I hope their people — the talent that they had — will stay around,” he said. “They might start new companies.”
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November 5, 2009 1:53:49 pm
Hopefully they will tear down all of the buildings so we can look at the beautiful fields that used to be there. Bummer...
November 5, 2009 3:10:36 pm
Hopefully Petaluma will be able to draw another large employer here at some point in the future. I think Petalumans need jobs during this time more than an empty field.
November 5, 2009 3:56:18 pm
No surprise here, look at all the other businesses that are, and have left town. Look to your elected officials for this too. Seems we can't even keep the existing businesses here, let alone draw new ones. Could it be, no, not the pathetic council(s) and commissions? Wise up petaluma, butt then you never did have your heads out of your derriere's long enough to do something logical to benefit the citizens of this "once" thriving community. Another empty facility, and yet they want to still build more. Butt then this planning commission fiasco will prevent that.
November 5, 2009 4:45:34 pm
"tear down the buildings and look at beautiful fields"...it's comments like that, that remind me on how this council majority came into power.
How about we look at backfilling those building with companies...those companies provide jobs...those jobs give families money...that money can be then spent within the community.
hmmmmm...
November 5, 2009 5:26:47 pm
Cisco leaving Petaluma is a long time coming, yet no less bad news. I use to hold much pride in my hometown knowing it had matured beyond a backcountry "poultry capital" to a thriving center of new "telecom valley". It is very sad to see all those empty commercial buildings. With them all gone, that entire N. McDowell complex will slowly dwindle and die. Petaluma officials need to get their act together, stop screwing around with cutesy cultural events and get this city to grow again. You can always go back to your roots but if you don't grow, roots will shrink.
November 6, 2009 8:26:35 am
I don't understand why Cisco leaving has anything to do with our council â?? seems to be just a convenient way to place blame, which the article rightly points to Cisco losing it's competitive edge and being hurt from the 2001 tech bubble burst. You could just as easily give the council credit for the firms that are here (Calix, Cyan).
The reality is that this has little to do with the council and more to do with demand and competition as a natural evolution of the telecom industry. Cisco is less competitive with some newer US firms who have out innovated them in optical network solutions (Teknovis here in Petaluma is a great example).
Of course it's better to attract new businesses to Petaluma to fill empty spaces then to demolish buildings, but there has to be a thriving market for companies to move in, and our economy is now only starting to recover. There are ways to create incentives which I know our council is considering, but creating more buildings when there are so many empty ones doesn't really make sense in the long term â?? it's simply not sustainable.
One thing the new administration is doing is beginning to help green energy development. After years of failed leadership under Bush â?? where foreign competitors were allowed to dump cheap solar panels into the US with impunity â?? we finally have an administration who sees the wisdom in helping the US regain momentum in green energy production. This could and should be our next major innovation â?? old telecom buildings could be transformed into renewable energy technology firms.
November 6, 2009 10:58:45 am
d2...how is it a "cut and run"? you talk about jobs....basin street constructed those building and went out, worked hare and brought CISCO to town, along with over 500 jobs. basin street did that...brought the company and the jobs to this town. they sold the buildings just like they did the redwood business park and others. how is that a "cut and run" as you put it? have you ever owned property (your home)? have you sold it? then you "cut and run" didn't you?
November 6, 2009 3:04:36 pm
d2....cut and run?? Those funds you talk about have literally built the entire downtown theater district!
While Basin Street still has some projects in the works in Petaluma, do you think there is just a slight chance the reason they have moved their development out of town is because of the anti-business atmosphere Glass and his cronies have created?
November 7, 2009 1:07:12 pm
Certainly Petaluma's anti-new business policies had an effect on Basin Street, but IMO it also was similar policies throughout the North Bay and Bay Area .... in contrast the greater Sacramento area is currently much more pro-new business and even more so Nevada, where state law is definitely much more friendly to new businesses than in California.
November 7, 2009 2:55:29 pm
The folks here like to blame everything that ever happens in Petaluma on the so called "new majority." Just look back over the posts on this forum since around DFeb. Their minds are made up, so it is understandable that you don't understand. many of us don't.
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