Pluris Preparing for Its Public

Pluris Inc. today announced a $100 million fourth round of private funding, which company officials say will be enough to ship its product and make it to an initial public offering.

The core router vendor, which was founded in July 1997 and has been plagued by several product delays and management changes (see Pluris Is Back), claims its architecture makes it more scaleable than product from Juniper Networks Inc. (Nasdaq: JNPR) or Cisco Systems Inc. (Nasdaq: CSCO). It is also competing head-to-head with emerging router vendor Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7), which recently went public.

Leading this round of investment was Sands Brothers & Co. Ltd., a New York-based private equity management fund overseeing more than $2 billion in assets. Ten of the company's former investors were included in this round, along with 14 new ones.

Investment banks such as Banc of America Securities LLC and Credit Suisse First Boston were included in the round, a sign that the company is working toward an IPO. Avici, another startup addressing core routing, has managed to hold onto a $2 billion market cap since its recent IPO, although shares have plummeted to $45 from the the triple-digit levels it hit immediately following the IPO. But the days of going public without customers -- or a product to ship to them -- are over, say many experts.

“All doors to equity IPOs are closed at this time," says Frank Dzubeck, president of Communications Network Architects Inc. "That is, unless you have substantial streams of revenue. You can’t go public purely based on concept anymore."

Pluris now has enough cash to get them through to an IPO sometime next year, according to Joe Kennedy, CEO. It seems to be on its way to rounding up customers. The company started trials seven weeks ago and more beta tests are scheduled to begin by the end of Q1. The product is expected to generate revenue in the first half of next year.

With the first generation of product supposedly on track, the company says it will use the rest of the money to continue developing its next generation of line cards with higher densities and higher-speed interfaces.

The company will also boost its sales force, which until a few months ago was nonexistent.

“The plan is to then build a skeleton and stop there,” says Kennedy. “We need to see how the product evolves. The worst thing you can do is build up a sales force and then have something go wrong with a trial and delay the release of the product.”

Although the company is clearly not the first into this market, it may have an edge over other vendors if it can actually deliver its promise of OC192 support. Right now, Juniper is the only router vendor shipping OC192. Avici, which also offers a scaleable product, is currently only shipping OC48 support.

“OC192 is hard to do,” says Paul Johnson, senior technology analyst at Robertson Stephens. “Cisco doesn’t have it yet, and its not entirely clear that they’ve been able to actually do OC48 well either. If they [Pluris] could deliver it before Avici or anyone else other than Juniper, that would definitely give them a leg up.”

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