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Optical/IP

Who Will Buy Photuris Remains?

Rumors are rife over who will buy the assets of Photuris Inc., a startup that shut down in late March. The startup fizzled after failing to be shortlisted for a big contract for reconfigurable optical add/drop multiplexers (ROADMs) by SBC Communications Inc. (NYSE: SBC). (See Photuris Is Finished and Photuris & SBC: The Inside Story.)

Several have seen the former-Photuris staff returning to work in their offices in Piscataway, N.J., and that's adding to the speculation. One anonymous source tells Light Reading that efforts are being made to reconstitute the development team so that Photuris's metro box can be sold as a working product, instead of breaking it up and selling different parts of it to different buyers.

Ashish Vengsarkar, founder and former VP of product management of Photuris, dismisses this suggestion. He's involved in the sale of the startup's assets and says the development team has dispersed and there's been no attempt to re-recruit them. Former staff have been allowed into Photuris's offices to do whatever they like, but they're definitely not working on company business, he says: "The company no longer exists."

Like any media-savvy salesman, Vengsarkar adds there's been a lot of interest in acquiring Photuris's technology. "All sorts of asset acquirers are looking at it."

Any such interest would probably derive from vendors trying to accelerate the development of their own ROADM products now that it looks as though SBC and other RBOCs are serious about placing significant contracts for such equipment. Cisco Systems Inc. (Nasdaq: CSCO) appears to be in this position (see Vendors Race for Reconfigurability). Nortel Networks Ltd. (NYSE/Toronto: NT) also might be trying to catch up, according to a consultant familiar with RFPs in this field.

One rumor doing the rounds is that Mahi Networks Inc. is a potential buyer of Photuris's assets.

Some of this is based on past remarks of Bill Cadogan, general partner of St. Paul Venture Capital. When Photuris was still alive, Cadogan expressed an interest in investing in it or "buying its bones" in the event of its demise, according to one Light Reading source. St. Paul is an investor in Mahi and Cadogan sits on its board -- it's not unlikely he sees some synergy between Mahi and Photuris.

A separate source close to a Photuris competitor says he's talked to a senior executive of a service provider who says a deal for Mahi to acquire Photuris's assets is under negotiation.

Cadogan did not respond to Light Reading's requests for comment. Mahi declined to comment. So did Vengsarkar, who points out that no deals have been concluded yet.

Mahi's acquisition of Photuris's box would make sense in terms of product fit, according to Scott Clavenna, chief analyst of Heavy Reading, Light Reading's paid research division.

Photuris's product (diagrammed above) is a multiservice transport platform (MSTP), while Mahi's is a multiservice switching platform (MSSP) according to Clavenna, who recently completed a survey of such equipment for Heavy Reading (see The Future of Sonet/SDH). Being able to offer both products, and possibly integrate them in some way, could be an attractive proposition for Mahi.

All the same, buying Photuris's MSTP without the development team that built it would be a non-starter, sources say. So the key question remains: What are the former staff up to in the Photuris office?

— Peter Heywood, Founding Editor, Light Reading

fancypants 12/5/2012 | 1:55:47 AM
re: Who Will Buy Photuris Remains? Obviously there is an inside leak since a loyal employee has provided a memo from Mr. Vengsarkar in the past.

http://www.lightreading.com/do...

Don't worry, Mr. Vengsarkar will root out the infidel.
fancypants 12/5/2012 | 1:55:48 AM
re: Who Will Buy Photuris Remains? This is great for the remaining Photuris employees. They will probably get a huge raise to pre-paycut levels. They get to keep working for the same mismanagement. And the best part is that "worst case scenario you'll be a millionaire".

Mahi will be getting a "world class" team.

Break out the champagne!

Stupis is as stupid does.
terrarooter 12/5/2012 | 1:55:54 AM
re: Who Will Buy Photuris Remains? Mahi's not a loser. They have real revenues. Real small - but real. They actually sold a box to an ISP in the midwest called Blackeye (soon to be Zorro?) systems or something.

Also, they have managed their investors far far better than any startup I know of. Where else have you heard of investors that have invested so much, in so few for so trifle a return ? And they're still lining up to invest. Reel them in Mahi!

Photuris dudes are probably peeing in their pants at the thought of just being noticed by the wizards at the mighty Mahi. And they should. To be acquired by them would be the ultimate deliverance. We should all be so lucky. Amen.
PhillipD 12/5/2012 | 1:56:04 AM
re: Who Will Buy Photuris Remains? I think this is even funnier than the classic "We ran out of patience".

"Former staff have been allowed into Photuris's offices to do whatever they like, but they're definitely not working on company business, he says".

No sir. No company business here. Nope. Absolutely no company business. All kinds of things going on, except for company business that is, we'll have none of that.

Are they running some kind of shelter for unemployed engineers (sorry, I meant engineers on "permanent unpaid leave") or is it like a big fun clubhouse? Perhaps they all go there to work on their resumes since nobody has computers at home these days. Maybe it is like an episode of some bad TV show where nobody has told their spouse and they are all just pretending to go to work each day? Yeah, that must be it.

Does Mr. Vengsarkar think that everyone other than himself is an idiot? Who does he think would believe that a company that is officially closed would suddenly re-open its doors to invite everyone back "to do whatever they like" and they would show up?!? Aren't there liability issues here? What if one of these people who are not working on company business gets hit in the eye with an errant foosball or a stray poker chip?

The team is gone. The technology is three years old. They have zero revenue. They blew the SBC RFP. But they've got brilliant leadership and a few people wandering around doing "whatever they like". I smell a bidding war for these assets
JoeBagadonuts 12/5/2012 | 1:56:06 AM
re: Who Will Buy Photuris Remains? Mahi's acquisition of Photuris's box would make sense in terms of product fit, according to Scott Clavenna, chief analyst of Heavy Reading, Light Reading's paid research division.

Well, if you listen to this comment then you obviously must be wrong....(sarcasm off)

This is such a 2000/2001 point of view. Why in the world would any major SP buy from a start-up that has been around since 2000 and not sold anything to date?

woodhead 12/5/2012 | 1:56:09 AM
re: Who Will Buy Photuris Remains? All of us know what result will be if Mahi does this.
RGreg 12/5/2012 | 1:56:11 AM
re: Who Will Buy Photuris Remains? The people I know who have been in sinking startups (unfortunately many, including myself) all have had similar experiences at work in those final weeks and months. They
a) use the company's broadband connection to
surf for a job
b) use the company's long distance to make
calls to potential employers or someone
who can help them find a potential
employer
c) update and send out multiple copies of
their resumes
d) a few of them MIGHT be involved in efforts
to find a buyer or last minute investor
e) they hold several informal wakes

---------
RGreg
readingsbelieving 12/5/2012 | 1:56:11 AM
re: Who Will Buy Photuris Remains? "A separate source close to a Photuris competitor says he's talked to a senior executive of a service provider who says a deal for Mahi to acquire Photuris's assets is under negotiation."

On what planet is this considered journalism?
truelight 12/5/2012 | 1:56:13 AM
re: Who Will Buy Photuris Remains? That's what they are doing !

One no-revenue company buying another know that's a n idea

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