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Optical/IP

Iris Group Wilts; Metera Next to Shutter

The bloom appears to be off the Iris Group companies, as Metera Networks Inc. is the latest of the optical incubator's companies to shut down for lack of funding.

The Iris Group is a loose-fitting group of companies that included Coree Networks Inc., Iris Labs, Metera, and Latus Lightworks Inc., all of which raised some $90 million in funding last year in an ambitious play to build a coordinated optical network architecture (see Iris Group Unveils Network Architecture and Iris Group Shuffles Executives).

As recently as a month ago, however, the group's plans started to fall apart as executives at the companies failed to secure additional funding to keep things moving along.

So, where are they now?

Latus Lightworks: The Richardson, Texas-based DWDM equipment maker closed its doors on September 21, leaving about 125 people without jobs. The company couldn't find the funding it needed nor could it locate a buyer able to move fast enough to bail it out (see Lights Dim at Latus).

Metera Networks: This Richardson-based metro optical equipment maker is set to close on September 28, leaving about 118 people in Texas and 20 in Ottawa without jobs, according to sources at the company. Though the company was only weeks away from customer trials, its founders and venture capitalists couldn't agree on a way to keep it afloat.

"We tried to come to a resolution in terms [with the investors], but we couldn't find anything acceptable to all parties," says Hamid Rezaie, Metera's cofounder and vice president of product planning. "Everyone involved tried very hard."

Metera is letting employees into its offices this week to conduct job searches.

Coree Networks: This New Jersey-based core switch maker never really got off the launch pad before it resized itself. The company still employs about 12 people who are continuing to study whether it's feasible to restart the core switch maker in a few months, according to William Szeto, president and CEO of Iris Labs (see Coree Networks Raises $30 Million and Coree Cuts Back).

Coree employed about 50 people when it announced its first round of funding in February.

Iris Labs: This Plano, Texas-based company is the only one of the four Iris Group companies that is still fully operational, Szeto says. It employs about 30 people. Iris Labs was founded to provide consulting and network software support to the Iris Group companies.

Some months ago, however, it began to focus on companies outside its doomed circle of kindred startups. The company has raised $7 million to date and is currently seeking between $10 and $15 million.

The venture capitalists involved in the various Iris Group companies include Hook Partners, Mayfield Fund, Sevin Rosen Funds, Vortex Partners, and Lightspeed Venture Partners (disclosure: Lightspeed is an investor in Light Reading).

As Metera and Latus decided to close, employees at both companies griped about feeling abandoned by investors that had recently pledged support. "They asked us to agree to all kinds of things [to get more funding] and we complied," says a source close to Latus Lightworks. "It didn't amount to a hill of beans. We still don't have our funding."

Others, however, are taking the Iris Group’s failures in stride, realizing that while the economy has slowed too quickly for investors to hang on to month-old promises. "As long as you're VC-funded, the world can change very fast," says Iris Labs' Szeto. "The last time I checked, venture capitalists aren't in the business of running charitable organizations.”

Michael Zadikian, cofounder of the Iris Group companies, couldn’t be reached by press time. Zadikian founded Monterey Networks, which was bought by Cisco in 1999 and shut down earlier this year (see Iris Group Attracts $60M and Optical Mania in Texas) and What Cisco Stepped In).

Richard Couch, CEO of Diablo Management Group (really!), has been hired by Latus' and Metera's investors to help sell each company's assets and intellectual property, according to people close to Metera and Latus. Couch did not respond to a request for comment.

Sevin Rosen's Jennifer Gill Roberts and Mayfield Fund's Todd Brooks, through their respective representatives, declined to comment for this article. Lightspeed's Barry Eggers and Christopher Schaepe also declined to comment.

- Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
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lightmaster 12/4/2012 | 7:48:27 PM
re: Iris Group Wilts; Metera Next to Shutter Telecom_guy said:

"Of course White Rock is going to survive...Because they have the extremely dense SONET products"

Dense SONET is good. Pay as you go is good. But from what I have seen White Rock's "stackable" packaging is incompatible with large Telco operations. Carriers want to be able to replace failed cards by pluging in new ones, not uncableing and unbolting individual network elements from racks. I am also puzzled as to how you get 1:n protection in a "stackable" product without creating a matrix of backplane connections - once again messy to configure. There's probably a market for it but it's not going to replace mainstream SONET ADMs.

"Sorrento...beating the heck out of ONI". ????
In the latest quarter reported, ONI had ten times the revenue of Sorrento, and they're not running out of cash like Sorrento is either.

I hope to have my competiton "beat the heck" out of me in the same way ;)

doitwithoptics 12/4/2012 | 7:48:27 PM
re: Iris Group Wilts; Metera Next to Shutter Snooty people is Metro-Optix. THAT'S Snooty
4Stroker 12/4/2012 | 7:48:10 PM
re: Iris Group Wilts; Metera Next to Shutter I would be interested in knowing your "expanded" thoughts on MetroOptix (I may agree with you!).
tiadakola 12/4/2012 | 7:48:09 PM
re: Iris Group Wilts; Metera Next to Shutter Telecom_Guy,

Do you live in MA & work in NH? Salem to be exact?
your_mama 12/4/2012 | 7:48:07 PM
re: Iris Group Wilts; Metera Next to Shutter ONI having XX times the revenues of sorrento??
with a big inventory write-off looming, who knows
how much bigger they REALLY are.....keep watching..
lightmaster 12/4/2012 | 7:48:02 PM
re: Iris Group Wilts; Metera Next to Shutter your_mama said "ONI having XX times the revenues of sorrento?? with a big inventory write-off looming, who knows how much bigger they REALLY are.....keep watching.."

Both are shrinking. The ratio may change slightly. Valuation may be impacted by writedownd, etc. but both are probably undervalued. Surviveability depends on cash and cash burn. ONI has deep pockets and enough revenue to survive even with reduced revenue assuming they reduce expenses. Sorrento has to grow revenue or die.
theanswer 12/4/2012 | 7:47:56 PM
re: Iris Group Wilts; Metera Next to Shutter As hs been discussed by others here, the cash burn rate of startups and having a well managed team at the top with connections can go a long way even in disperate times. Many of the CLECs and other top buyers, MCI/WC, Sprint, AT&T, SWB, .....aren't buying big orders from the startups or even the big 5 equipment makers.
What will happen is the new starups that concetrated on small scalable building blocks are better positioned to survive. We all know the game COST, SIZE, and POWER. Companies that really took those issues the most serious while designing a powerful set of features will possibly demonstrate that strategy in the coming quarters. That is unless the economy gets even worse, lets say by double.
No need to mention names since everyone get twisted. Lets just wait and let the Lab Trials speak for everyone.
ajo2 12/4/2012 | 7:47:42 PM
re: Iris Group Wilts; Metera Next to Shutter lightmaster said: ``But from what I have seen White Rock's "stackable" packaging is incompatible with large Telco operations. Carriers want to be able to replace failed cards by pluging in new ones, not uncableing and unbolting individual network elements from racks. I am also puzzled as to how you get 1:n protection in a "stackable" product without creating a matrix of backplane connections - once again messy to configure''

I guess you didn't make it to Supercom or NFOEC. They have a chassis with cards that plug in, so it replacing failed cards should be as easy as it is with any other vendors equipment. It's just smaller than what anyone else has.
highend 12/4/2012 | 7:39:38 PM
re: Iris Group Wilts; Metera Next to Shutter Does anyone have any info on Kirana Networks?
Where do they stand, what are they about and
how will they do?

Highend
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