It's down the drain with Soapstone Networks Inc. (Nasdaq: SOAP).

Soapstone's board of directors has approved a liquidation plan, the company announced last night. The plan now goes to stockholders for approval.

It's a grim final act for the company that once strove to remake core networks as Avici Systems. (See Avici Abandons Routing, Targets PBT.) But Soapstone's situation wasn't a secret; the company had announced in February that it was looking for a way to get cash back to shareholders. (See Soapstone on Slippery Slope?)

Under the dissolution plan, shareholders would receive a cash dividend of $3.75 per share, minus any amount Soapstone ends up needing to cover liabilities. That would be followed by an additional post-liquidation payout of, probably, 25 cents to 75 cents per share.

Soapstone shares closed at $3.74 yesterday; the liquidation announcement came after U.S. markets closed.

Soapstone's press release claims the company and advisor Morgan Stanley looked at all the possibilities, including a stock buyback and an assets sale, but found no "potential transaction which the Board viewed as reasonably likely to provide greater realizable value to its stockholders" than liquidation.

All hope is not lost. Soapstone's press release notes that the company is still willing to consider an offer, provided its value is deemed better than the liquidation plan.

Soapstone was down to 50 employees and has now reduced that number to 14. It's also stopped selling the Soapstone Provider Network Controller (PNC) product, although the impact of that move isn't clear. PNC didn't start shipping until recently, and Soapstone hadn't disclosed any customers for it, although ANDA Networks Inc. was identified as a partner. (See ANDA, Soapstone Team.)

PNC, drawn from know-how developed during Avici's heyday, is a control plane for hire, intended to be applicable to many types of networks. Soapstone's first marketing target happened to be Provider Backbone Transport (PBT; now more commonly called PBB-TE), but it was meant to be applicable to other Ethernet transport types as well as Multiprotocol Label Switching (MPLS).

Vice president of marketing Esmeralda Swartz explains, in this custom video installment from October.

{videoembed|166570} — Craig Matsumoto, West Coast Editor, Light Reading