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Tata to Tahoe?

Wireless router startup Tahoe Networks is denying rumours it's about to shut up shop following a spate of redundancies, management restructuring, and a dearth of contract wins.

Various sources tell Unstrung the company has laid off more employees and faces serious funding problems. “Remaining employees have been forced to take vacations,” one source says. “It is likely to be shut down this week or next. At least, that is when the cash is supposed to run out.”

The suggestions follow prolonged rumblings of ill health at the San Jose, Calif.-based business (see Tahoe Loses Bodies, Tahoe's VP Roundabout, Nouveau CEO for Tahoe?, and Tahoe Confirms Cutbacks).

The company’s U.S. office had not returned calls by press time, but Herve Liboureau, VP of EMEA sales, was more forthcoming. “We are well [on track] on our GSM plan… and are discussing partnership for the next phase of development," the Frenchman claims in an email. “Also, financially speaking, the good of having large experienced VCs like Accel Partners and Redpoint Ventures is that they are fully committed and aligned with our strategy.”

Despite Liboureau’s taureauish standpoint, the vendor has failed to deliver on its numerous claims of "imminent" customer announcements, and has yet to release a public statement on this year's progress (see Tahoe Talks Shop).

“That suggests a shell of a company possibly making assets for sale,” comments Ken Rehbehn, principal analyst for wireless infrastructure at Current Analysis. “I am starting to see ex Tahoe-ites popping up in other companies. They are throwing off skill and talent because there is nothing going on.”

In the event of Tahoe's downfall, other analysts believe the vendor is unlikely to disappear altogether. "It's probably more likely that the technology would be bought up by one of the large wireless vendors," says Liz McPhillips at Probe Group LLC.

Tahoe and rival vendors Megisto Systems Inc., Starent Networks Corp., and WaterCove Networks Inc. have struggled to establish themselves in a market where operators are leery of working with startups. Many carriers remain unconvinced of the value of their next-generation service node (PDSNs/GGSNs) offerings. (See Having a Flutter on the GGSNs and What's the Wireless Router Market Worth? for more on the technology and market.)

Some, though, appear to be faring better than others. WaterCove has just scored an OEM deal with Alcatel SA (NYSE: ALA; Paris: CGEP:PA) (see WaterCove Wins Alcatel).

— Justin Springham, Senior Editor, Europe, Unstrung

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