Last Night at the Operax
Although the company, which developed well regarded technology in an increasingly important service control niche, has been engaged in a number of trials with Tier 1 European carriers such as BT Group plc (NYSE: BT; London: BTA), Orange (NYSE: FTE), and Telecom Italia (TIM) , Light Reading understands that Operax has failed to generate any meaningful revenues. (See IP Traffic Smarts Hit Berlin, Operax Completes TI Trial, and Sources: Operax Scores With Tier 1 Carriers.)
And it seems the company's investors have run out of patience just as Operax has run out of cash. Light Reading believes Operax's backers, who have invested more than $15 million, have decided not to pump any more cash into the company and are looking for a quick trade sale of its technology portfolio and intellectual property. (See Operax Receives Two Patents and Operax Scores $15 Million.)
Day-to-day control of Operax now appears to be in the hands of the team at Emano AB , one of its venture capital investors.
Emano's managing director, Finn Persson, is running what's left of the company, while Emano's investment manager, Peter Knutsson, is the acting CFO. Knutsson said he could not comment, while Persson had not responded to emails or calls as this article was published.
The company's other investors either declined to comment or didn't return calls and emails, while Richard Lowe, who was appointed as Operax's CEO in March 2007, could not even confirm to Light Reading whether he was still involved in the company: "I can't tell you anything," said the former Micromuse man. (See Operax Names New CEO.)
Operax's demise appears to be mainly down to timing issues. The company developed standards-based technology that performs policy and admission control based on bandwidth availability, so enabling QOS control of services such as VOIP and video on a per-session basis. That development attracted the interest of a number of large carriers with next-generation network plans and led to extensive trials.
However, that interest did not convert into significant purchase orders, largely due to the longer-than-expected time that major carriers are taking with their next-generation, service-oriented technology decisions.
"They were just too early. Everyone acknowledges that Operax has good technology, but the carriers aren't ready to buy an admission control product at the moment," says Heavy Reading chief analyst Graham Finnie.
That timimg issue also led to the demise of another policy control specialist, Tazz Networks. (See Tazz Shrinks, Shifts Strategy .)
Operax's investors have been concerned about the lack of sales for some time, and so brought in a new management team just over a year ago in an effort to generate new business opportunities.
Since then, Operax has forged a number of partnerships to try and build up alternative sales channels and tried to reposition itself in the market, but the company ran out of cash. (See Operax Repositions, Operax, Velankani Partner, Operax Names NA Partner, Operax Names US Partner, and Operax Hunts New Partners.) So what happens next? Is it exit stage right for Operax, or will a buyer provide the Swedish specialist with a curtain call? One potential acquirer would be Ericsson AB (Nasdaq: ERIC), which has been working closely with its fellow Swedish company at France Telecom, but the Swedish giant declined to comment on whether it had been approached about swallowing Operax.
— Ray Le Maistre, International News Editor, Light Reading