Centerpoint's Yard Sale
Dana Waldman, the company’s president and CEO, says that only a skeleton crew remains at the company’s San Jose, Calif., facility as they try to liquidate the company’s intellectual property and physical assets. The company filed for Chapter 11 bankruptcy protection in Northern California earlier this year.
“We decided it was best to wind down the company and sell all the assets, instead of reorganizing,” he says.
Centerpoint’s demise comes as no surprise. The company has been on life support since last spring when it supposedly was making the rounds for more funding. In the early part of the year, it had gone on a mini Wall Street roadshow seeking up to $90 million in new funds by selling Series E convertible preferred shares (see Centerpoint 's Appeal: Sooo 1999?).
Like other optical and telecom startups, Centerpoint’s gear was targeted at competitive carriers, which were all struggling financially.
“We had several key customers and prospects declare bankruptcy,” says Waldman. “It’s hard to survive when all your customers disappear.”
The bankruptcy of FLAG Telecom Group Ltd. (OTC: FLHLQ), Centerpoint’s only announced customer of its Celerity DWDM product, had the greatest impact on the company (see FLAG Flies Into Bankruptcy). The carrier filed for Chapter 11 protection in April 2001 and recently emerged with a reorganized balance sheet (see FLAG Emerges From Chap. 11). But it's too late for Centerpoint.
The company raised a total of about $200 million since it first began in 1999. Its last round of $130 million was completed in October 2000. Over the years, the company not only received funding from large venture capital firms like Amerindo Investment Advisors Inc. and Menlo Ventures, but it also got cash from Cisco Systems Inc. (Nasdaq: CSCO) and SBC Communications Inc. (NYSE: SBC).
In its early days, the company focused on wireless technology along with the optical transport technology known as FDM (frequency-division multiplexing). It gained notoriety in 2001 when it acquired distressed optical startup Zaffire, which had been developing metro area DWDM transport gear (see Centerpoint Scoops Up Zaffire).
Zaffire had raised about $100 million in cash from big names like MRV Communications Inc. (Nasdaq: MRVC), Kleiner Perkins Caufield & Byers, Banc of America Securities LLC, Morgan Stanley Dean Witter & Co., and Juniper Networks Inc. (Nasdaq: JNPR). Combined, the two companies employed 435 people just after the merger was announced. Nine months later, trouble was evident when it shrank to roughly 100 employees.
In May Centerpoint sold off its wireless division to radio frequency equipment provider Fresnel Microwave Systems, based in the U.K., for an undisclosed amount (see Centerpoint Sells Wireless Division).
— Marguerite Reardon, Senior Editor, Light Reading