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Optical/IP

Landlord Takes Polaris

The assets of optical transport player Polaris Networks have apparently ended up in the hands of its landlord, Silicon Valley real estate developer Carl Berg, according to the networking company's former CEO.

As part of the transaction, Surya Panditi has stepped down as CEO of Polaris. He tells Light Reading this was his own decision, made as a way to avoid conflicts of interest, as he'd handled the negotiations with other potential buyers and with Berg.

Polaris at one time had multiple offers on the table, Panditi says. One deal with Anda Networks Inc. seemed imminent as recently as last month, but then quickly collapsed (see Anda Closes In on Polaris and Source: Anda, Polaris Deal Is Off).

Every term sheet had one element in common -- the money offered "would not satisfy our outstanding debt," Panditi says. "The senior creditor was unwilling to accept the offers on the table, but was willing to put some money into the company and run it."

That creditor was Berg, CEO of Mission West Properties Inc. (AMEX: MSW), the landlord on the 55,000 square feet Polaris was leasing in southern San Jose.

Panditi says he isn't privy to Berg's plans, but would Mission West be interested in running an optical networking company? An intellectual property sale seems more likely.

One source familiar with the company says that's exactly what Berg's trying to do -- and that he's only retained two Polaris employees.

One potential buyer -- described by one source as a longshot -- is Eastern Research Inc., a New Jersey vendor of digital crossconnects and other access-network transport devices.

Eastern seems to think of themselves as a longshot, too. "We are not in any kind of discussions with Polaris at this point," says David Kamm, director of marketing.

It's an intriguing theory, though. Eastern is owned by the Allen Organ Co., which purports to be the largest seller of church organs in the world. So, Polaris could change hands to a real estate mogul and thence to an organ manufacturer. Next thing you know, Qwest Communications International Inc. (NYSE: Q) will swoop in with a higher offer. (Just kidding -- see Qwest: Twice Bitten, Not Shy.)

As one might expect of a Silicon Valley landlord, Mission West has had its share of post-bubble trouble. The company happened to be landlord to terabit-router startup and Polaris soundalike Pluris Inc., which Mission West ended up suing in 2001. Pluris would eventually shut down (see Pluris Shutdown Confirmed).

Polaris's annual base rent was $971,574, according to Mission West's recent 10-K filing with the Securities and Exchange Commission (SEC).

Polaris raised $77 million since 2000, but announced just two customers in its lifetime: McLeodUSA Inc. (Nasdaq: MCLD) and Xspedius Communications LLC (see Polaris Moons Over McCleodUSA ).

Panditi, meanwhile, appears ready to take a break from it all. In addition to leaving Polaris, he's also vacating his board seat at core router vendor Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7), where he's been chairman since 2001. Panditi also did a short stint as CEO of Convergent Networks Inc. in 2002 (see Surya Panditi).

— Craig Matsumoto, Senior Editor, Light Reading
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reoptic 12/5/2012 | 3:18:04 AM
re: Landlord Takes Polaris Avici, Convergent, Polaris: Good time for a break.
c_headed 12/5/2012 | 3:18:03 AM
re: Landlord Takes Polaris is hyperchip or charlotte's web still around? Looks like the startups living off the core router hype are pretty much gone.
Burned 12/5/2012 | 3:18:01 AM
re: Landlord Takes Polaris Seems like a lot of the blame for the fate of Polaris belongs to Ray Kao. He's the one who dreamed up a product with no market. Panditi perhaps should have seen this but the creator really ought to stand at the front of the line.

He doesn't seem to have a great record in this area, by the way. His prior product was dropped by Cisco as a lost cause.
startup_shutup 12/5/2012 | 3:18:00 AM
re: Landlord Takes Polaris I remember San Jose Mercury News article hyping Kao and Polaris.

I mean is it not clear by this time that startups have FAILED in employment model??
These are mostly places where people survive by sucking upto founders and cronies.

San Jose Mercury News is similarly hyping real estate -- only time will tell......
Burned 12/5/2012 | 3:17:59 AM
re: Landlord Takes Polaris Just wondering how someone like Kao manages to continue to gather investments from people who I would think should be wiser. He seems to be a failure in producing product, that's bound to make selling to some sucker (like Cisco) tougher in the future.
startup_shutup 12/5/2012 | 3:17:55 AM
re: Landlord Takes Polaris Did Ray Cao take personal responsibility for ruining employees work-life-balance (WLB) for past four years?? Now Pandity is embarking on a nice world tour whereas ex employees are left to fend for themselvs.

Did you hear that Keenu Reeves donated 83 million for rank and file Matrix actors? Now that is true leadership (in other words true leadership is acquired through self sacrifice -- not in typical SV style of power grabbing and exploitation....)
deauxfaux 12/5/2012 | 3:17:54 AM
re: Landlord Takes Polaris Screwup

It didn't happen. This from Fox News.

http://www.foxnews.com/story/0...

It is clear that you aren't even smart enough to google up a fact check, so it is no surprise that you were whacked when management figured out how "capable" you really are.
startup_shutup 12/5/2012 | 3:17:53 AM
re: Landlord Takes Polaris Please try to understand the message:

Silicon Valley leadership is hollow and failure is as clear as daylight. Sham enterpreunership is being rightly punished now and in the coming decade! Long live globalization, thumbs down to hype, hysteria and marketng maina (in other words if this is innovation then I do not want it) .
rjmcmahon 12/5/2012 | 3:17:53 AM
re: Landlord Takes Polaris Startup culture (and specially Silicon Valley startup culture) needs more professionalism and fairness.

Beyond fairness and professionalism, do startups have any other social responsibilities? If so, should those be institutionalized from the beginning days of its creation?
rjmcmahon 12/5/2012 | 3:17:53 AM
re: Landlord Takes Polaris deauxfaux; Why are you so emotionally invested and being so defensive in what startup has to say? To the outside reader it indicates you have a internal conflict of sorts going on. Finally, these "startup_screwup" responses seem to be leading you away from virtues. If you feel startup is misguided, than why not provide guidance?

What do you think about Friedman's position on corporations and social responsibility?

http://www.colorado.edu/studen...

When I hear businessmen speak eloquently about the "social responsibilities of business in a free-enterprise system," I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned "merely" with profit but also with promoting desirable "social" ends; that business has a "social conscience" and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are–or would be if they or anyone else took them seriously–preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.
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