Pluris Shutdown Confirmed
Pluris announced that it had closed a $53 million funding round in February and, at that time, boasted that it had raised some $215 million since its inception (see Pluris CEO Bolts and Washout Rains $53M on Pluris). Now, however, several close to the company say that Pluris only received about half the money it was supposed to get during its fifth funding round before investors decided to pull the plug.
Pluris executives have not returned calls seeking comment. Certain Pluris board members have agreed to talk on the record later today.
As part of its most recent financing, Pluris reworked its entire capital structure to entice investors and employees to stick around. One month later, however, Pluris CEO Joe Kennedy left the company and Pluris has been steadily thinning its ranks ever since (see Pluris Hangs On).
For a brief period, Cynthia Ringo, the former CEO of CopperCom Inc., took the top job at Pluris. All the while, though, Ringo and the company made it clear that she wasn't the permanent replacement for Kennedy.
Pluris first announced its product in the spring of 1999 but then went quiet for several months while it frantically built the product it had already hyped (see Pluris Is Back). In June 2000, then-CEO Joe Kennedy admitted that exposing itself too early was a mistake. "The programmers were still writing code when they launched the product," Kennedy told Light Reading. "Then we had nothing else to announce. We couldn't announce that our last announcement was wrong."
The company announced it had closed a funding round of $100 million in November 2000. At the time, it believed that amount to be enough to see the company through to an initial public offering (see Pluris Preparing for Its Public). In February 2002, the company reorganized its capital structure and expected to receive $53 million in new funding from its investors.
As part of its capital reorganization, Pluris sent its shareholders paperwork about two months ago, informing them that it was executing a reverse split, according to one shareholder who asked not to be identified. A reverse split occurs when a company reduces the number of outstanding shares and increases the price per share proportionately.
Pluris shareholders were taking part in a 20-to-1 reverse split, according to the shareholder. This means that for every 20 shares they owned prior to the split, they would have one share afterwards.
Adding to Pluris' financial strain were several factors, say those close to the company. For one thing, the company had fallen out of favor with Mission West Properties, a Silicon Valley landlord, over a property dispute. Mission West sued Pluris in June 2001 and the two companies later settled.
There are also unconfirmed rumors that IBM Corp. (NYSE: IBM) required a hefty upfront fee -- upwards of several million dollars -- to produce the custom chips that would power Pluris' core router products.
As if that weren't enough, carriers who typically buy core routers (well, those that have survived) are having financial worries of their own. Pluris joins core router startups such as Coree Networks and IPOptical as another casualty in an overcrowded market.
In the past few months, former employees say the company tried to sell itself to at least two competitors -- Procket Networks Inc. and Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) -- but neither were interested.
Eventually, the uncertainty of Pluris's future began to take a toll on the more than 100 employees left. "After the last round of layoffs, people had pretty much given up hope," says one former Pluris engineer. "We were just going through the motions."
— Phil Harvey, Senior Editor, Light Reading