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Optical/IP

Ceyba Shuts Down

Ceyba Corp. has confirmed the company has closed its doors.

Rumors of Ceyba's demise surfaced on Light Reading yesterday (see Headcount: Survey Sez), though signs of trouble had persisted for months (see Ceyba Rattling in Ottawa). Today, CEO Scott Marshall says the remaining 120 employees are going home today.

"Our board was not convinced we could do another round of funding," Marshall says. Ceyba had cash, but one of its VCs pulled out of a planned round for later this year (he won't say which one, though he says he'd like to). There were candidates to replace the defector, but the board thought it too risky.

"There's no new investment in long haul," Marshall says. "Frankly, I think it's a very good time to invest... But the long-haul market is going to be very slow for a long time."

He insists Ceyba was progressing despite the slow market. Two customers had picked the company's products for installation -- one was to get its gear this week. Two more were testing Ceyba's wares in their labs.

Now, unless the company's assets can be sold quickly enough to a bigger player, those deals will fall through.

Ceyba started life as Solinet Systems in 2000 to develop next-generation long-haul gear based on optical technology. By early 2001, Marshall, formerly of a Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Cisco Systems Inc. (Nasdaq: CSCO), was on board as CEO (see Solinet Gets CEO From Cisco), and the company had scored a monster round (see Solinet Systems Scores $93 Million). Chief investors included Altamira, Alta Partners, Bessemer Venture Partners, New Enterprise Associates (NEA), and WorldView Technology Partners. A name change followed (see Solinet Morphs Into Ceyba).

The Ceyba closing is another sign of the troubles facing the next-gen long-haul networking sector. As the need for long-haul capacity has waned, so have the startups that were the darlings of optical networking funding two years ago.

Ceyba's chief rivals, Innovance Networks, PhotonEx Corp., and Xtera Communications Inc. have reported progress in fits and starts, but their overall prognosis is still uncertain (see What's Cookin' at Core Startups?). At one point recently, Innovance was described as a possible candidate for a big U.S. government RFP win, but it looks as if that hope may have evaporated (see Lehman Spots Gov't RFP Surprises and Corvis Solo in Bake-Off Boast).

Partnerships have been cited as key to the future of any of these companies. Ceyba was reportedly looking into a deep-pocketed parent months back, and Marshall says he's got "a lot of ideas" about who may buy the assets.

Is there a chance Marshall would try to restart the company with a new mission, perhaps as part of a wider-reaching technology startup? "Anything's possible," he says. In the meantime, though, his goal is to "have a couple beers and maybe get some water-skiing in" before heading to a new project. [Health Advisory to Scott: Don't try both at once!]

— Mary Jander, Senior Editor, Light Reading

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KPSmells 12/4/2012 | 11:39:35 PM
re: Ceyba Shuts Down What goes around comes around. The founders of Ceyba were the most arrogant bunch. They stole secrets from Nortel as well as several other startups before starting Ceyba/solinet. They even interviewed at several startups pretending to be looking for jobs just to steal secrets. Great to see that laws of nature work. They finally got what they deserved.
sgamble 12/4/2012 | 11:39:34 PM
re: Ceyba Shuts Down Nice. Tell that to the 120 people working there with bills to pay. Good luck to Matt and the rest of the gang from Ceyba.


Steve.
optical 12/4/2012 | 11:39:30 PM
re: Ceyba Shuts Down How much IP can you steal during an interview? I think this is a pretty wild claim and whenever 120 people lose their jobs, I wouldn't say that is good news. I'm sure there were alot of good people at Ceyba who will have to find new positions in a very tough environment.
zettabit 12/4/2012 | 11:39:30 PM
re: Ceyba Shuts Down Anytime a start-up closes its doors it is bad news for the grunts that were working hard to make it succeed. Sometimes it is even too bad for execs....sometimes failure is what they deserve after their arrogant waste of other peoples dollars (think of Jasmine Networks, for example).

However in today's optical long-haul market, it is also bad news to have more than a dozen vendors all offering near-identical solutions into a market that is a quarter of what it was 3 years ago. So what needs to happen is called "consolidation", so that the business available is shared amongst fewer vendors, enabling them to have viable business revenues that can support their required ongoing R&D while still making some type of profit. Sadly, this situation does not exist today, either for the money losing big guys such as Lucent, Ciena, or Alactel, or for equity-funded start-ups that are burning investors cash.

In that case it is good news that Ceyba is gone. What the industry needs is for about another half-dozen long-haul players to dissappear also - like Corvis (which has no revenues), like Lucent's LambdaExtreme (which has no customers), like Innovance (which has no compelling economics), like Marconi's long-haul products (which have no hope) and like Celion (which has no clue). I appologize for the any other losing companies I have not mentionned, but at the end of the day we need to have 6-8 global long-haul suppliers for this to become a viable industry again.
joe_average 12/4/2012 | 11:39:30 PM
re: Ceyba Shuts Down I'm probably trying to change a leopard's spots but here goes.

KP- It is a sign of a small heart when you revel in the misery of other people. There *will* come a time when you are going to experience some difficulty in your life. How would you appreciate having other people celebrating your problems?
sir-wish-pro-wide-her 12/4/2012 | 11:39:29 PM
re: Ceyba Shuts Down With new demises being reported steadily for startups with the passage of time over the last 3 years, it appears that the surviving equipment vendors shall see a decent upswing in their stock prices in near future (12+ months), because of:
1. Lower competition, and
2. ability to acquire startups at reasonable/favorable valuations

Granted that the overall demand is still weak, but, a startup gestation period (inception to beta) is atleast 18+ months, and so it appears that there shall be a window of 18-24 months where the surviving equipment vendors shall see above average opportunity, relatively speaking.

Any thoughts and stock recommendations?
KPSmells 12/4/2012 | 11:39:28 PM
re: Ceyba Shuts Down was:
NEA

So beware of these vultures. Do not work for any company that is funded by NEA !!
KPSmells 12/4/2012 | 11:39:27 PM
re: Ceyba Shuts Down I did not mean any ill wishes towards any of the innocent emplyees and executives who got caught in the pyramid scheme led by the dishonest founders and aided by the vultures of silicon valley. My comment was aimed at the founders exclusively.
Go_SENS 12/4/2012 | 11:39:25 PM
re: Ceyba Shuts Down The only thing the founders screwed up is hiring the wrong management , who hired more idiots from Alcatel!
The founders were a great bunch of techies, unfortunately with little confidence in themselves or their own people!
single mode figure 12/4/2012 | 11:39:25 PM
re: Ceyba Shuts Down Madhu was such a caring person I am shocked that his shtick is gone..
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