Startups Stumble and Succumb

Grim news about a couple of startups emerged today from Sweden and California.

In Sweden, the directors of Dynarc finally gave up trying to rescue the metro equipment startup. They announced today that they will file for bankruptcy, having failed to interest new and existing investors in a plan to keep the company going as a much smaller entity (see Dynarc Files for Bankruptcy).

Dynarc has been on life support since last October, when it ran out of cash, laid off all but 30 of its staff and started looking for ways to reinvent itself (see Dynarc in Trouble).

Only a couple of years ago, Dynarc was riding high. It was valued at more than $600 million when it raised its last round of funding -- $55.4 million, in February 2000. It went on to win an $18 million equipment order from Song Networks Holding AB (Nasdaq: SONW), a service provider that has also hit hard times.

In California, component startup Solus Micro Technologies Inc. sounds as though it might be in a position similar to the one Dynarc was in last October. "We're preparing to file for Chapter 11 reorganization," Ben Jamison, the company's VP of marketing and sales, told Light Reading today. This will happen "in the next few days."

Jamison says Solus is merely reorganizing "for a specific reason," on which he can't elaborate right now. "It'll become clearer in the next few weeks," he says, assuring that "the company has no plans to shut down."

Solus has already laid off an undisclosed number of staff. Jamison won't give details, but he says they were mainly production staff, no longer needed because the company now plans to outsource manufacturing.

"Some executives will probably be shuffled," he adds. Solus's president and CEO, Terry Bailey, will be going, as will Jamison himself. "Basically, the engineering organization will remain intact," says Jamison.

Solus is developing "compliant MEMS" technology to make a range of tunable components. The "compliant" bit comes from using a special elastic polymer membrane in its devices, making them more flexible than MEMS (micro-electromechanical systems) built with conventional materials. This translates into lower costs and wider tuning ranges, according to the company. Its first products, tunable filters, appeared to compete with ones developed by Coretek, the tunable laser startup acquired by Nortel Networks Corp. (NYSE/Toronto: NT) (see Solus: Another Coretek?).

Jamison says Solus is shipping samples of its first product to customers, who are "continuing to work with us."

— Peter Heywood, Founding Editor, Light Reading

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