Cisco leaves Petaluma

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.”