AP Engines refocused its operations, cut an undisclosed number of jobs, and replaced its CEO. The changes began last week and are continuing, and stem partly from spending cutbacks by cable operators, specifically Time Warner.

"We put ourselves in a position to last until mid-2003," says board member and new CEO Karl May. Former CEO Jon Sieg has left the company, and other management changes have been made, as well, he adds. May wouldn't elaborate on job cuts or personnel changes, saying they are still underway.

A former employee, who asked not to be identified, says during the past six months, the company cut its 120-member workforce to 20 people and closed its California office, where its cable people worked.

"A lot of what we were doing was customized work in the cable space," May says. As part of the "slimming down, (AP) will focus on building products that require much less customization on our part."

By targeting such areas as business process automation products, the privately held company wants to deliver to a much broader market, he says. "What I'm trying to do is ensure we have a diversified market to get our product out to."

May says cable operators, while "still among the more robust spenders," have announced substantial cutbacks in the last four weeks. "They've all announced reductions in capital spending," he says.

The company had a deal with Time Warner Cable that was put on hold, which played a role in the refocus. May would not discuss the deal in detail, but said AP was developing a pilot system for TWC that had to do with merger requirements. AOLTW has been working diligently on multiple ISP mandates that were put in place by the FTC as a condition of its merger.

"We were developing a solution that addressed that," May says. "They decided to put on hold deployment of that system."

The deal entailed software AP was creating that helped automate the multiple-ISP process, according to another source, who adds that AP also was working on schematics for CableLabs' Go2Broadband program, which would act as an interface into the AP Engine software for TW's project. A TW executive said the software would not be ready in time for its multicity deployment of multiple ISPs and opted for a manual process instead. The automated version may be used later, the source added.

TWC spokesman Mike Luftman said AP was working on software for the multiple ISP tests in Columbus, Ohio. "We had a very good experience working with AP Engines," he says.

Asked whether TWC had stopped the project for deadline reasons or that it entailed automation, Luftman refused to comment on decisions the company made related to technical solutions related to the multiple-ISP projects or the vendors associated with them.

May says AP concluded that a lot of cable operator purchasing decisions were postponed "given concerns of subscriber growth." It focused on "what's the common denominator of what we're building and looking for broader applicability, instead of allowing ourselves to be pigeonholed."

The changes mean AP intends to stay involved with the cable industry for the long-haul. "Our goal is to ensure that we're still standing well into 2003," May says.

He adds that the company has the resources to do so. In June, it announced a $30 million second round of financing, headed by San Francisco-based Thomas Weisel Capital Partners. A representative could not be reached by CEDaily's deadline.