Photuris Is Finished

Startup Photuris Inc. confirmed today that it's effectively closed down.

The company has burned through the $40 million round of funding that it announced 18 months ago and has now put its staff on permanent unpaid leave. "Effective now, the assets are up for sale," Ashish Vengsarkar, founder and VP of product management, told Light Reading today.

Vengsarkar hopes to find a buyer that will take on not just his company's innovative metro network products but also at least some of the 50 staff that were furloughed last week. "The product will only make sense if it's acquired with some of the people that developed it," he said, denying reports that some key staff have already got jobs elsewhere.

The decision to pull the plug on the company was triggered by a "negative decision" by one of the three RBOCs trialing Photuris's equipment, according to Vengsarkar. He declines to say which RBOC, but it's almost certainly SBC Communications Inc. (NYSE: SBC), judging by an anonymous note sent to Light Reading by someone in the know, and a research note from UBS Investment Research analyst Nikos Theodosopoulos this morning.

Theodosopoulos's note says that SBC's RFP for reconfigurable add/drop multiplexers is worth "well under $50 million year" and is likely to be shared between two parties. The first party is likely to be an existing supplier -- probably Fujitsu Ltd. (OTC: FJTSY; Tokyo: 6702) or Nortel Networks Corp. (NYSE/Toronto: NT). The second party is likely to be a startup partnering with a major vendor -- either Movaz Networks Inc. with Lucent Technologies Inc. (NYSE: LU), Tropic Networks Inc. with Alcatel SA (NYSE: ALA; Paris: CGEP:PA), or Photuris with Siemens Information and Communications Networks Inc..

The Movaz/Lucent partnership is already official (see Lucent & Movaz Seal Deal). Tropic declined to comment. Vengsarkar declines to talk about any of the RBOC trials but says that Photuris was in talks with partners and that Siemens and UTStarcom Inc. (Nasdaq: UTSI) were "definitely the leading ones." Theodosopopoulos's note does not say that Photuris/Siemens had been knocked out of the running.

Photuris makes (or made) a metro DWDM box with a difference. It doesn't just multiplex low-speed signals onto a wavelength. It has a full-blown Sonet add-/drop mux (ADM) on a card, which makes for very efficient network upgrades according to Scott Clavenna, chief analyst for Heavy Reading. "Often times carriers still have to have Sonet ADMs next to metro DWDM systems for reasons of service protection, bandwidth management, and so on. With Photuris, they wouldn't. The linecard could do it all.

"I wouldn't take [Photuris's shutdown] as a rejection of the technology -- it was sound, if rather complex -- but more likely a rejection of strategy and execution."

Vengsarkar says the great thing about Photuris's box is (or "was" as he put it) that it eliminates complexity for carriers, by automating the process of recalculating power budgets when networks are reconfigured. The flip side of this was that the box was over-kill for small carriers where reconfiguring networks wasn't an everyday occurence and could be done manually. The market for big carriers created all sorts of complications, such as finding a big vendor to partner with.

It all came to an end last week with the "negative decision" from the unnamed RBOC. "We ran out of patience" says Vengsakar (not to mention money). The staff were sent home, and he's now phoning vendors to invite them to pick over what remains of the startup he helped found in January 2000.

— Peter Heywood, Founding Editor, Light Reading

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corvisalum 12/5/2012 | 2:09:12 AM
re: Photuris Is Finished wow - great team. also heard the product actually worked. wonder what this means to startups with great technology if they can't pierce the iron curtain (large carrier relationships with incumbent vendors). mahi, watch out.

Oh well, another one bites the dust.

Peter Heywood 12/5/2012 | 2:09:07 AM
re: Photuris Is Finished A source in the know says:

1. The contract might worth more than $50m a year. SBC has a $200m Sonet budget and a significant proportion of that might eventually go into ROADM, over time.

2. There is a single contract, not two, as Nikos suggested in his note.

beenthere 12/5/2012 | 2:09:05 AM
re: Photuris Is Finished yes, great team, if you don't include the management team.....
Optic_Dude 12/5/2012 | 2:09:03 AM
re: Photuris Is Finished It would be curious to hear from Photuris people whether the culture and environment was better there, or did they behave just like a small Lucent with politics, attitudes, and poor leadership.

Peter Heywood 12/5/2012 | 2:09:03 AM
re: Photuris Is Finished Dude, the overall impression I've got froma couple of anonymous messages is the same one voiced by Scott Clavenna in the article - innovative, sound technology, but for whatever reason, the management didn't manage to pull off what Movaz pulled off, with its partnership with Lucent.
riffed_off 12/5/2012 | 2:09:02 AM
re: Photuris Is Finished
It's been several weeks since Ciena last announced an acquisition.
That's a long time for them.
whyiswhy 12/5/2012 | 2:09:01 AM
re: Photuris Is Finished "permanent unpaid leave" used to be an euphamism for "there's not enough money in the bank to make the last payday" so "we'll hold your last check for ya'".

I hope I am wrong, and that the wording is just PR-speak for we let everyone go, and they are doing the right thing.

Note to ex-Photuris dudes: get that last check and walk it to your bank. Make sure it clears. FWIW, even electronic transfers can be un-transfered. Check that it clears too.

If the company starts up again, you have lost your vacation. But the money is in your pocket.

Much better than the other way around.

Unfortunately: Been there, done that.
Stevery 12/5/2012 | 2:09:01 AM
re: Photuris Is Finished I think OD was refering to culture & environment, which Clavenna comments did not address.
I would also be curious to whether or not the Lucent culture was imported, whether the culture turned CYA (as a bad leader can cause in startup), etc.
Failure analysis is useful, sniping is not.
answeris42 12/5/2012 | 2:09:00 AM
re: Photuris Is Finished ca - are you sure you're not talking about Procket? seems like the dust is headed their way.
5514DD 12/5/2012 | 2:08:58 AM
re: Photuris Is Finished I was expecting Photuris is Phinished...

Sorry, I couldn't resist. My apologies to those I offended.
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