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Optical/IP

Centerpoint's Yard Sale

Assets from Centerpoint Broadband Technologies Inc. are going the way of lava lamps and used toaster ovens, as the company struggles to get whatever it can for what’s left of the company.

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
www.lightreading.com
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stuartb 12/4/2012 | 9:13:14 PM
re: Centerpoint's Yard Sale That's the noise $300M makes when it goes down the toilet.
stuartb 12/4/2012 | 9:13:14 PM
re: Centerpoint's Yard Sale That's the noise $400M makes when it goes down the toilet.
MrLight 12/4/2012 | 9:13:14 PM
re: Centerpoint's Yard Sale If Chapter 11 just means the private/public company has to reorganize.

And since Centerpoint was never a public company so it can't go through a Chapter 7, where a Chapter 7 is the filing under which public company assets are liquidated to satify creditors.

Then I assume Centerpoint is going through a Chapter 13 filing, which liquidates a company's?

Can anyone clarify this point?

MrLight :-? Not clear on this chapter 7,11,13 stuff.
mordecai 12/4/2012 | 9:13:12 PM
re: Centerpoint's Yard Sale any idea if this stuff will hit ebay? I need a nice Fluke and Tek scope for home projects, and my new career in analog amplifier repair.
sarcastic 12/4/2012 | 9:13:09 PM
re: Centerpoint's Yard Sale Centerpoint went down, Brocade isn't healthy, and the new tenant in the former Centerpoint suite is not doing well either. It must be the building, because it is impossible that it was the fault of the fearless leaders!
BobbyMax 12/4/2012 | 9:13:08 PM
re: Centerpoint's Yard Sale It is clear to me that Centerpoint would not have succeeded given its history of moving from wireless broadband to CWDM. The company was put to sleep at a cost of $300 million. What they were doing was meaningless but I am glad they left the mother earth.
polyland 12/4/2012 | 9:13:08 PM
re: Centerpoint's Yard Sale test
mordecai 12/4/2012 | 9:13:05 PM
re: Centerpoint's Yard Sale Bob-

I totally agree. that technology was soo weak that it died in university labs a long time ago....coherent reception just sucks in optical, and baseband modulation has been shown over and over to be the right approach.

I'm glad the bubble is over.. it was driving me nuts.
whyiswhy 12/4/2012 | 9:12:56 PM
re: Centerpoint's Yard Sale Based on your statements, I guess my HFC cable does not work...nor do any of the HFC systems in the world.

SA, Moto, and all others in the HFC game use analog (they call it digital, but it is 16-64PSK) RF (on carriers) over fiber. It eats xDSL baseband for lunch, 2:1, and there are no distance versus speed issues.

I agree on the business issues however. They chose to try to market cable technology to the LECs...sounded good to the investors obviously: cable (dull), telecom (glory and riches). It was never clear to me how either Kestrel or Centerpoint would beat the likes of SA or Moto if one of them actually developed a market in telecom for HFC. Exit? OK, maybe...

Sorry to those out of work.

-Why
gea 12/4/2012 | 9:12:53 PM
re: Centerpoint's Yard Sale "It is clear to me that Centerpoint would not have succeeded given its history of moving from wireless broadband to CWDM. The company was put to sleep at a cost of $300 million. What they were doing was meaningless but I am glad they left the mother earth."

Yes, let the aliens return to home plenty with their junky startup technology. Probably their flying saucer will crash because it was builded with Cisco technology.
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