JDSU Gets Optovia
Optovia, which developed "hut-skipping" amplifiers for long-haul links, had real shipments and big-name customers, but couldn't get the cash flowing quickly enough. A bridge loan from Hercules Technology Growth Capital may have been the company's undoing, as sources say the lender put the startup on the auction block once the money ran out.
For those involved, it's a frustrating end.
"We had orders, we fulfilled orders, and we had future orders," says one former employee, who requested anonymity. The employee notes that the end was slow and painful, with staffers reduced to working half-time for the final weeks and forced to use up vacation time.
One source pegs the price at $3.5 million. JDSU won a brief bidding process that sources say included Avanex Corp. (Nasdaq: AVNX).
ADVA Optical Networking , an OEM reseller of Optovia's, was interested but couldn't get a necessary deadline extension, according to one source; ADVA officials could not immediately be reached for comment. (See Optovia, ADVA Team Up.)
The deal gives JDSU two inexpensive pickups lately, as the company also acquired pieces of the former Metconnex, for $2.5 million, in a deal announced Oct. 17. (See Metconnex Sells to JDSU.)
JDSU officials wouldn't confirm the purchase of Optovia and declined to comment on the situation.
Founded in 2002, Optovia pinned its hopes on a resurgance of long-haul optical transport, building amplifiers that could go twice as far as usual. That would allow a carrier to skip every other amplifier hut along a long-haul route -- hence, the name "Hut Skip" for one of Optovia's products. (See Optovia Doubles Amplifier Reach.)
Its executives came from Qtera, a bubble-era acquisition target for Nortel Networks Ltd. ; some of the old PhotonEx gang reportedly joined Optovia, too. (See Nortel Completes Acquisition of Qtera and PhotonEx Falls Into 40Gig Hole.)
Part of Optovia's technology included Raman amplifiers, a specialty product that's not that easy to make, with low volumes even by optical standards. JDSU doesn't appear to have a current line of Raman amps, so would the company be interested in selling Optovia's products itself? "As far as I know, JDSU doesn't even know," says one optical vendor. "It's just a low-cost asset."
A different source close to Optovia said five staffers had been offered jobs at JDSU, with a handful of others offered contracts to be part of a transition team. Those employees who chose to join JDSU seem to be doing little beyond "cleaning up some of the old bugs," the source adds.
Optovia, which had 40 employees earlier this year, was finding some success. In addition to ADVA, Nortel had reportedly signed on as a customer. The company was making noise about serving the storage-area networking market as well. (See Optovia Claims Longest SANs.)
Revenues were thin, though; one source familiar with Optovia's situation estimated its 2006 take at just $2 million.
Even for a startup that was "very tight-fisted," as put by one source who says his company worked with Optovia, those revenues weren't enough to live on. Optovia had raised more than $20 million from Atlas Venture and North Bridge Venture Partners but needed more, so the company got a $5 million loan from Hercules in January.
Sources say that when the money ran out, Hercules ended the party.
"The bank that had given them the line of credit said, 'That's it,' " says an employee from one optical-components vendor. "There was nothing fishy about Optovia, just bad timing."
Hercules and North Bridge did not return calls for comment; Atlas declined to comment.
Other vendors of Raman amplifiers include Accelink Technologies Inc. , AOC Technologies Inc. , Avanex Corp. (Nasdaq: AVNX), Furukawa Electric Co. Ltd. , MPB Communications Inc. , Red-C Optical Networks Ltd. , SDO Communications Corp. , Sumitomo Electric Industries Ltd. , WaveSplitter Technologies Inc. , and Wuxi Zhongxing Optoelectronics Technologies Co. Ltd. (WXZTE) .
— Craig Matsumoto, Senior Editor, Light Reading