Cascade Communications

» see casc.com as it lived, on the wayback machine

~ the goodbye ~

Cascade Communications Corp. was incorporated in Delaware on 16 October 1990, a date its own accountants put in the first note of every annual report, and in nearly seven years of existence it never sold a single thing to a person. Its customers were telephone companies. It built wide area network switches that sat in carrier facilities and moved frame relay and ATM traffic between cities, which is to say it built the boxes that the rest of the internet rented capacity from. Gururaj Deshpande started it. Dan Smith ran it as president and chief executive from April 1992, having spent the previous five years selling LAN gear for Proteon.

The revenue line is the whole story in five numbers. Cascade billed $816,000 in 1992, then $6.96 million, then $50.1 million, then $134.8 million, and then $341.0 million in 1996, a 153 percent increase in a single year at a gross margin of 64.9 percent. At the close of 1996 it employed 833 people out of an 80,000 square foot building in Westford, Massachusetts, with eighteen sales offices across the United States and ten more abroad. The money came from the regional Bell operating companies: U.S. West alone was 17 percent of 1995 revenue, Bell Atlantic another 12 percent.

Then the market it had invented filled up. Cisco bought StrataCom in early 1996, which put a company an order of magnitude larger directly across the table in every frame relay bid, and Newbridge and Nortel were already there. On 30 March 1997 Cascade and Ascend Communications announced a definitive merger agreement in a joint press release, 0.7 of an Ascend share for each Cascade share, structured as a pooling of interests and a tax-free reorganization. Ascend's own language called it "one of the largest mergers in the history of the networking industry." Based on where Ascend's stock closed on 27 March, the two companies valued it at approximately $3.7 billion.

I was thirteen when this happened, with my first modem still a year off, and an earlier start online would make no difference to any of it: nothing Cascade built ever carried a name a customer could read. The closest it came to a consumer-facing artifact was the copyright notice on casc.com. The archived homepage from 20 June 1997 signs off with a footer reading "Cascade. Setting the pace in carrier class ATM, IP, Frame Relay and Access." Ten days later there was no Cascade.

~ the chronicle ~

~ june 1997 ~

The press release said the deal was expected to close in the third quarter. It closed in the second instead, on 30 June, the final day the second quarter had. Ascend's annual report for 1997 puts it in one flat sentence: "On June 30, 1997, the Company acquired Cascade Communications Corp., a leading developer and manufacturer of carrier class Frame Relay, ATM and IP switching products." Dan Smith's title changed that same month to executive vice president and general manager of core systems. The news column on the homepage, still sitting there in the archive, carries a stockholder-approval notice from 28 May and, above it, an antitrust waiting-period termination dated 10 June.

Because it was a pooling of interests rather than a purchase, there is no acquisition price in the accounts and never will be. What does appear is the bill for doing it: Ascend charged $150.3 million of one-time merger costs to operations in 1997, mostly investment banking and professional fees plus reserves for redundant assets and severance. Cascade filed its Form 15 on 16 September 1997. Under "approximate number of holders of record" it says One.

~ who bought the switches ~

The scale is easy to miss now. Ascend's auditors noted that they had not audited Cascade's own statements, and that those statements accounted for 29 percent of consolidated total assets in 1996 and 47 percent of consolidated revenues in 1995. For two of the three years in the combined accounts, Cascade was close to half of the company it got folded into.

Ascend survived the purchase by just under two years. Lucent took it in June 1999, and the frame relay business that had looked like the future in 1996 was obsolete infrastructure before the decade ended. Deshpande and Smith left and founded Sycamore Networks in 1998, which had its own famous run and its own quiet ending. The B-STDX 9000s stayed in service for years under three successive owners, racking up uptime for carriers who had no particular reason to know the name on the original purchase order.

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