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Optical/IP

Corona Networks Scores $40M

Corona Networks Inc. is scheduled to announce today (9/27) the closing of a $40 million funding round, proof that some investors still think there's money to be made in the telecommunications hardware business.

Led by Merrill Lynch & Co. Inc. Ventures and New Enterprise Associates (NEA), Corona's third round of funding should be enough to see the company through to "a quarter or two of revenue," according to Ramandeep Singh, Corona's president and CEO.

Corona is developing an aggregation and IP services switch, called the ISP 12000 (see Corona Intros IP Service Platform), for the network edge market. Though not scheduled to ship until early next year, Corona says the ISP 12000 is already in trials with four carriers, which Singh declined to name, assuring only that, "They're very large carriers."

They would have to be, being that the ISP 12000 will likely cost in the hundreds of thousands of dollars per box. Though none of the carriers have signed pledges to buy the product, Singh says the trials are "a good first step" toward eventual revenues.

"We're very confident we'll have customers," says Singh, who believes the network edge will be among the first markets to see any pickup in capital expenditures.

"We've talked to the largest carriers, and they have spending plans in place for the [network] edge," Singh says. "Their cutbacks have mostly been in long-haul. The edge is where we expect to see a lot of [buying] activity." Additionally, he says, the latest round of cash gives Corona enough funding to get through developing and shipping the ISP 12000, a process Corona hopes to reach by early next year.

Tom McConnell, general partner at NEA, says he will likely take over as Corona's chairman, replacing Steve Pearse. Pearse, a friend of Corona co-founder Raj Singh, is currently a more active chairman with Inara Networks Inc., another startup (see Ex-Cyras CEO Joins Roshnee Spinoff) in the Raj Singh stable. McConnell, who says his firm has invested a total of $27.2 million in Corona to date, adds that he "really believes in this team," calling them a "focused group" with a solid core of engineers and executives.

McConnell says Corona's ability to secure carrier trials was "an important milestone" for the company's investors. "We're confident that this latest round will get [Corona] to revenue shipments, and maybe even cashflow break even." McConnell also praised Corona's ability to stretch budgets. "Every dollar this company has had has been well spent," he says.

The ISP 12000, according to Corona, is designed for central office or points-of-presence deployment, between carriers' edge access and core backbone connections. Though the company's website claims that the ISP 12000 can support interfaces from 10/100 Ethernet through OC-192, the fastest links available by early 2002 will only be at OC-48, according to Alex Henthorn, Corona's senior director of product management. Henthorn says support for higher speeds will be added over time. Corona also claims that the ISP 12000 will offer built-in firewall and VPN support.

- Paul Kapustka, Editor at Large, Light Reading
http://www.lightreading.com

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Mike Lazar 12/4/2012 | 10:10:01 PM
re: Corona Networks Scores $40M
datacom,

you perhaps didn't read my early message on this company in May.

http://www.lightreading.com/bo...

I told you these guys sure know how to shoot in their own feet. As a recruiter, I hear lots of horror stories about working in various companies, but nothing as strange as about this company. I told you the duo of CEO and engineering VP make sure that no senior manager stays there for more than a year be, in marketing hardware or software.

I think only way to save the company is to perhaps replace the current management team with a new management team that can create a peaceful environment within the company. They have created many very resentful ex-employees or current employees in the valley, and any startup can be better without such illwill.
datacom 12/4/2012 | 10:09:49 PM
re: Corona Networks Scores $40M Mike,

You are right but question is does the board has courage to show the scheming duo the doors to save the company? I don't believe so. They had handful of good experienced people all of them seems to have left due to being pissed of by these guys, or pushed out by the self serving duo within the last few months. Which then really comes down to that the company is destined to die the slow painful death leaving a big hole in the investors pockets. But then I suppose they deserve it.
techstud 12/4/2012 | 10:09:41 PM
re: Corona Networks Scores $40M
I initially used to believe in this company, but this weeks event and some related reading on this board confirmed that both the only remaining founder and the CEO seems nothing but total idiots, and most hated person in the organization as of now. not because of RIF but what they did to remaining software group in milpitas. how can someone with any brain let their best and most knowledgeable software director leave when you are so closed to the end game. these guys are total morons, and board should fire them, if they ever want to see any progress. the hated two seems to have screwed the company, exploited the employees, and cheated their investors. I was surprised to read some of the explots on other thread.

http://www.lightreading.com/bo...

I am hundred percent convinced that in a few months this company will be history. only fools will buy their product, if they have any, or invest any money in this company. I am sorry for the ordinary engineers who worked so hard. but egoistn supremely arrogant and foolish excutive spoiled all their work. consider expected trial sale as no go, given that every carrier now know how they treated their ex-colleagues. NEA folks you have been warned !
George Lucas 12/4/2012 | 10:09:32 PM
re: Corona Networks Scores $40M
When I came to know about last weeks event today, I am forced to conclude that the ignorant founder and equally foolish CEO have gone berserk (crazy) and appears that they jointly need some common sessions of mental help for insanity in nearest lunatic asylum in San Jose. I fully agree that as far as company is concerned, it is definitely dead. All it needs now is the formal funeral arrangement in the forms of liquidation agents.

The cunning duo has managed to live to this day despite backstabbing many good people that came to the company in the past, and perhaps by fooling and lying to VCs since VCs have little or no idea what they have done to the company from inside or what is the true nature or state of the company's product. But, this time, it appears to me, at least by talking to several people inside, they have exceeded what in general parlance we call the limit of sanity. How can they backstab one of the most committed, valueable and devoted member of their own management team. Machiavelli would have been very proud of the thuggery and the deceit of the two within the company. Who is next in the line? Can you trust anyone at all within the company? I am told that everyone is right now watching their own back, and wondering who is next.

As a long term industry watcher, I can now confidently say that vultures are already out. It is not question of if, but when they start picking bones from the skeleton of this once promising start up in the area. Sorry my friends if you are still there, and worked hard over the years. There is not much you can do to save it now.
jamesbond 12/4/2012 | 10:09:27 PM
re: Corona Networks Scores $40M George Lucas wrote -

past, and perhaps by fooling and lying to VCs since VCs have little or no idea what they have done to the company from inside or what is the true nature or state of the company's product.
------------------------

This brings up a question - Why don't VCs really
care after putting in millions of dollars? I
would think they would be in everybody's under-pants after giving them their money. They should
know inside out what the state of the product is,
what kind of chemistry exists in the team,
what is the turnover rate etc etc.


George Lucas 12/4/2012 | 10:09:19 PM
re: Corona Networks Scores $40M
Jamesbond,

you made a valid point. The problem is that it is easy to fool and deceive VCs if you continue to repeat the lies over and over again by two board members who have mastered the art of deception. Even when employees are asked to talk to VCs, they are told exactly what to say else ....

Do you think people can tell the truth when two extremely vengeful persons, who have the proven record of no-hesitation knife killing of all those who dared to speak any thing resembling truth, are standing next to you? These guys have been merciless to even their close circle team members when times come to ditch. Ask past and present employees whoever came in their touch?

Also, VCs are finacial folks, and tend to believe what is fed to them in earnest (remember individual Arthur Enderson Auditors?). As per the information except NEA, all other VCs have put only a couple of million dollar each in the A and B round. After taking their one time bite in 2000, it appears have practically already written off the investments. Except NEA who has made bulk of investment no body else cares at this point. NEA has to preserve its already invested capital, but they haven't perhaps yet noticed the screw up in the company in the last six months. I will be surprised if Corona in its current state can get even one dollar from any new VC. Revenue is out of question on a half completed product.

What I hear about the product is that it is still way off and can barely run over a day without coming to ground. They nearly had a product last year when engineering team was at its best for some six months, but then they changed the directors (thats why they could raise series C). The supremely arrogant and cunning founder and his buddy CEO again conspired to take care of a very competent and experienced senior platform software director. Perhaps they thought the guy may replace the founder as engineering VP. Since then it has been all downwards motions. One suicidal mistake over others. One act of unprecdented treachery over other. How can a company create a stable product if engineering team is in permanent state of mutual suspician and change?

I don't think it is going to matter now. I could already see (liquidation) vultures already flying around them in big numbers. It is just the matter of time when sick prey breathes its last, and they jump on the dead body apart bone by bone.

What a waste of human talent and hard work of many talented engineers, because VCs couldn't control two idiots at the right time!
George Lucas 12/4/2012 | 10:09:19 PM
re: Corona Networks Scores $40M (repost with corrected typos)

Jamesbond,

you made a valid point. The problem is that it is easy to fool and deceive VCs if you continue to listen to the repeated lies over and over again by two board members who have mastered the art of deception. Even when employees are asked to talk to VCs, they are told exactly what to say else ....

Do you think people can tell the truth when two extremely vengeful persons, who have the proven record of no-hesitation knife killing of all those who dared to speak any thing resembling truth, are standing next to you? These guys have been merciless to even their close circle team members when times come to ditch. Ask past and present employees whosoever came in their touch?

Also, VCs are financial folks, and tend to believe what is fed to them in earnest (remember individual Arthur Enderson Auditors?). As per the information except NEA, all other VCs have put only a couple of million dollar each in the A and B round. After taking their one time bite in 2000, it appears they have practically already written off their investments. Except NEA, who has made bulk of investment, no body else cares at this point. NEA has to preserve its already invested capital, but they haven't perhaps yet noticed the screw up in the company in the last six months. I will be surprised if Corona in its current state can get even one dollar from any new VC. Revenue is out of question on a half completed product.

What I hear about the product is that it is still way off and can barely run over a day without coming to ground. They nearly had a product last year when engineering team was at its best for some six months, (thats why they could raise series C), but then they changed the directors. The supremely arrogant and cunning founder and his buddy CEO again conspired to take care of a very competent and experienced senior platform software director. Perhaps, they thought the guy may replace the founder as engineering VP. Since then it has been all downwards motions. One suicidal mistake over others. One act of unprecdented treachery over other. How can a company create a stable product if engineering team is in permanent state of mutual suspician and change?

I don't think it is going to matter now. I could already see (liquidation) vultures already flying around them in big numbers. It is just the matter of time when sick prey breathes its last, and they jump on the dead body to take it apart bone by bone.

What a waste of human talent and hard work of many talented engineers, because VCs couldn't control two idiots at the right time!
willywilson 12/4/2012 | 10:09:14 PM
re: Corona Networks Scores $40M This brings up a question - Why don't VCs really
care after putting in millions of dollars? I
would think they would be in everybody's under-pants after giving them their money. They should
know inside out what the state of the product is,
what kind of chemistry exists in the team,
what is the turnover rate etc etc.

----------

That's what you'd think, and that's what I thought before I got to know the VCs over the past few years. In fact, they are quick-buck artists with little knowledge, no long-term vision and absolutely no ethics whatsoever.
techstud 12/4/2012 | 10:08:45 PM
re: Corona Networks Scores $40M Lucas,

I agree with you that Corona is practically dead thanks to machinations of founder-cum-VP engineering and his CEO buddy. But, the reasons why VCs in this case don't care are not obvious to every one.

I can't find any published information on who their board of directors are. But what I know about the directors cum VCs of this company, NEA and Merrill Lynch appears to be the majority investors with small money from Redwood, Ignite and Alliance Ventures. The survival of excutive management depends on what the first two VCs think of recent upheavals in the company.

In my opinion, if VCs wish to see this company have any chance of survival, then this is the time to act. They must fire the executive management team and the CEO at Milpitas except for CFO and Sales VP since they have no role in running how engineering decisions are made. These guys have done enough screw up thanks to their vengeful approach of running the company.

IF VCs act now, the whole world will know that they care. Otherwise, they deserve to loose their money.

TruthWillInfect 12/4/2012 | 10:08:38 PM
re: Corona Networks Scores $40M TechStud,

I find it particularly amusing that you can somehow absolve the CFO and VP of Sales for what's happened at Corona. It's easy to single out the CEO and VP of Engineering for the engineering mess, but the truth is that if the CFO and the VP of Sales had proactively told the VC's the truth - Corona would not be the mess that it is today.

One, The VP of Sales was specifically hired by the CEO to mislead the investors and raise capital. He has worked both sides of the "game" complaining about the CEO, while he hides behind the CEO whenever he feels threatened. He never intended to make any sales - and has expressed this to all of top management that will listen. He knew that he couldn't be faulted for not making any sales since there was no viable product. He's built a sales team of his cronies, and has made a very nice living for himself and his team, by utilizing his contacts to provide "references" regarding Corona's products to potential investors. Consider this, with the limited pool of possible customers, how big a sales team do you need? What do they with their time to justify those huge salaries and bonuses - and not be held accountable for the fact that they have not made a single sale? And still, Corona keeps paying for travel expenses around the world. The sales team is getting a worldwide vacation funded by the investors.

However, without the VP of Sales representations to the investors...Corona would have closed it's doors a year ago.

As to the CFO, he was placed at Corona by NEA to be their watchdog. Instead of being an advocate for NEA, he has become an active advocate for the CEO and The VP of Engineering. He's made himself a career of talking out of both sides of his mouth. He tells top management that he's trying to "save" the company and he doesn't know what he can do, while he spouts the company line to the investors and VC's. He hasn't delivered on a single promise, but he too has surrounded himself by his own cronies who do the actual day to day work while he wanders in from time to time - he might as well be already retired. And believe it, he won't be getting just a two week severance package when Corona finally gasps it's last breath. If I was NEA, I would be extremely angry that the person that I placed in the company to protect NEA interests was only interested in protecting his own paycheck/severance package until he's ready for retirement. The "good old boy network" - isn't it wonderful for the "good old boys". I love it that he has snowed top management into thinking that he's looking after them, while he holds the CEO in his hip pocket. Is he trying to give himself a "back door" of defenders to testify in his defense if the investors cry "foul"?

From the CEO, all the way down to HR, every department is guilty of cronyism to the extreme.
The people who were retained were not the best and brightest, or the most effective, they were the personal friends of the decision makers. Of course you haven't had any management for more than a year. When they finally get up to speed and cry foul - they aren't freinds any more and they have to go. Some are hired, as a favor, simply to create a better resume for their next job. If we examined family relationships at Corona - you would be astounded at the amount of cousins, etc., that are there. Since no one, at any time, has ever been held accountable at Corona for performance, personnel decisions are based on relationships rather than valid business purpose, experience or skills. HR can share the blame for this one. When HR does not take a stand to promote hiring based upon qualifications, cronyism will prevail. That's what you get when you hire an HR Manager with limited fashion sense instead of one with common sense. But how can you blame someone who lacks even the simplest understanding of their own position? Someone who cries crocodile tears at terminations, feigns concern for Corona's employees, gossips endlessly, and is only interested in a MRS. degree.

Small wonder that the company has no product, no sales, and no management.

Both the CFO and the VP of Sales knew from the beginning that there was no product at Corona. They were uniquely in the position to effect a change. If they had conducted themselves ethically and told the Board the truth, Corona would not be in this mess today. And, given that some of the departed management had tried to tell key members of the Board the truth and were summarily dismissed - the Board shares the blame for this disaster. They've been too busy trying to suck in other investors to shore up their own investments, rather than make the hard decisions about pulling the plug, or making the CEO, CFO, VP of Engineering,VP of Sales and HR, accountable for their actions.

So where does the blame lie? With the Board, the CEO, the VP of Engineering, the CFO, the VP of Sales and with HR. Everyone shares in this one.

Corona's Board Members:

NEA: Tom McConnell
Ignite: Steve Payne
Redwood Ventures: Rajvir Singh
Merrill Lynch: David Pickering
Alliance Ventures: C.N.Reddy
Steve Pearse









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