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Optical/IP

Mayan Ruins?

Mayan Networks Inc. may be going the same way as its namesake civilization.

The startup, which is developing a next-generation Sonet switch for metro area networks, is the latest in a line of startups feeling the effects of an ongoing optical networking shakeout. Today, the company announced to employees that it would be downsizing its workforce in an effort to cut costs and asked for volunteers to take the lead in falling on their swords for the company.

One source anonymously sent Light Reading an email purportedly issued internally by Andrew White, VP of corporate resources at Mayan:

    In order to conserve our cash to be able to complete future development we must reduce our expenses now and focus only those resources we need on the essential work that has to be done. Consequently, we have determined that we must reduce our workforce commensurate with those needs and the capital we have available.

    As we consider the necessary steps to be taken, we want to offer our employees the opportunity to volunteer for separation before we proceed with any involuntary reduction in our workforce. Some individuals who have key skills that we have identified as essential for the achievement of our goals will not be eligible for this separation package.


Mayan raised its initial $8 million round of funding in November 1999. Since that time it has grown to nearly 200 employees and has added over $90 million of funding to its coffers but still hasn’t been able to announce a customer.

Mayan's problems could stem in part from the fact that it had been targeting competitive local exchange carriers (CLECs) as customers. Shorter sales cycles and greater interest in partnering with startup equipment companies originally made these service providers good customers for startups, says Dennis Barsema who was CEO of Redback Networks Inc. (Nasdaq: RBAK) until last July and has recently emerged as CEO of component startup Onetta Inc.

But now, with the capital markets drying up, numbers of CLECs are running out of money and shutting down operations. AduroNet Ltd., Digital Broadband Communications, and FiberStreet are just a few of the most recent casualties (see AduroNet Goes Bustand Digital Broadband Fades Away).

Equipment startups are often the hardest hit by these closings. For example, Zaffire Inc., a metro DWDM player, announced a $20 million contract with FiberStreet a month before the company closed its doors (see Zaffire Gets Zapped). Ironically, Mayan and Zaffire, which both appear to be struggling, are co-sponsoring a seminar on the future of optical networking in the metro area network. It's set to begin on March 6.

And since the company is competing in an already crowded market, a reduction in potential customers is not a good sign. Especially, when some of its competitors are large players like Cisco Systems Inc. (Nasdaq: CSCO), through its Cerent acquisition; Redback, via its Siara deal; Lucent Technologies Inc. (NYSE: LU), through its Chromatis buyout; Fujitsu Ltd. (KLS: FUJI.KL); and now Ciena Corp. (Nasdaq: CIEN), through its acquisition of Cyras.

The scene is also crowded with other startups that haven’t been bought yet, like Astral Point Communications Inc., Geyser Networks Inc., and Ocular Networks Inc.

Mayan did not return phone calls by press time. But in previous interviews Dan Gatti, the company’s CEO, has acknowledged that the onslaught of CLEC closings was having an impact on the company (see Zaffire Gets Zapped).

-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com

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opti fool 12/4/2012 | 8:33:59 PM
re: Mayan Ruins? Can we get a tally of CLECs that have flopped/sought bankruptcy protection so far in the US and Europe? I think there are at least 8 firms.



T-bone 12/4/2012 | 8:49:09 PM
re: Mayan Ruins? Customers have been slow to move to VPNs. Here's an excerpt from Total Telecom:

VPN specialist Aduronet goes under
By Ray Le Maistre, Total Telecom

09 February 2001

"The management team was solid gold - this is a great shame," Camille Mendler, Yankee Group Europe's director of convergent communications service, told Total Telecom. "But you don't fail to get second-round funding just because of cynicism and market conditions. You need to be able to explain clearly what your business proposals are, and one of Aduronet's problems was explaining their position in the market. They were focusing on value-added services and were not an infrastructure play, but they found themselves caught between a rock and a hard place. You need a certain amount of infrastructure for economies of scale," she added.

"The target was right - virtual private networks for corporate customers," continued Mendler. "But it was noted in the industry that it was difficult for Aduronet to articulate its message about how it could empower corporates with these value-added services - that's a difficult message to get across."
clowell 12/4/2012 | 8:49:14 PM
re: Mayan Ruins? Does anyone have any real idea as to why Aduronet actually folded? Poor sales team, weaker than expected demand, poor pricing schemes, over spent on random items? It seems as if the business plan was solid -- new network, cheap bandwidth, great cost advantage, what went wrong?
FiberFan 12/4/2012 | 8:49:37 PM
re: Mayan Ruins? R-007,
My take on Alidian and Astral Point is as follows.

Astral point is a very interesting play. They have a god-like box but seem to have signed a couple of big fish- notably Time Warner telecom. I have a few good friends at TWT and they said thet they really aren't deploying much so I'm curious as if it's a delivery problem or, if TWT just isn't ordering much. I really thought that Astral Point was gonna pop a few more notable ones but it just hasn't happened. I think that's very curious.
Alidian's prospects on the other hand are more muddled. Their only recent press announcements show that they "interoperate" with other gear in lab tests. Although success in lab's is very important, you usually would hope that it's in a potential customer's lab and followed by a puchase agreement. They have no customers on the hook (that we know of) coupled with the fact that within the metro space, their product set (next gen SONET) is really competitive (Cisco, Redback and Astral point among others). It seems as thouh they are between stages two and three. Time to execute.
Of course these are my opinions but I can say that I watch this "space" very closely.
Hope this insight helps.
FiberFan
allidia 12/4/2012 | 8:49:44 PM
re: Mayan Ruins? I read a message board for Lightpath indicating that Lightchip is also on the verge of IPO. Anyone???
allidia 12/4/2012 | 8:49:44 PM
re: Mayan Ruins? anybody know the status on this IPO. I know they have ATG and Comcast as customers and I hear they are buying quite a bit of components?
sonet_rules 12/4/2012 | 8:49:51 PM
re: Mayan Ruins? Yes, that's true. More of them are leaving.....
reader007 12/4/2012 | 8:50:01 PM
re: Mayan Ruins? where do you think Alidian or astral point fits here.

Do you think they will survive this storm.
guy_incognito 12/4/2012 | 8:50:03 PM
re: Mayan Ruins? Yup, I've heard that too.

--------
I heard Equipe picked up an Astral Point architect. Anyone heard same?
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