Long-haul startup Xtera Communications Inc. has bought the assets of Metro-Optix, a maker of multiservice provisioning gear that closed its doors in July (see Metro-Optix Pulls the Plug). Terms of the cash-and-stock deal weren't disclosed.

The possibility of such a move first surfaced on Light Reading two weeks ago, as Xtera reported $30 million in new funding (see Xtera Scores Surprise $30M). Xtera CFO Chris Ryan says the potential deal didn't affect the funding round. "Nothing was contingent... Funding closed before [the deal was done]," he says. But he acknowledges the round is still open, which leaves the door ajar for additional investors now that the arrangement is final.

According to Kris Shankar, a former Metro-Optix exec who is now VP of marketing and business development at Xtera, the agreement addresses a serious problem facing Xtera -- the delays and carrier pull-backs in spending that have devastated other long-haul startups (see Ceyba Shuts Down and Ex-PhotonEx? ). The acquisition gives the company a shorter-range set of prospects.

Xtera's sticking to its original product plans, says Shankar, but long-haul gear requires long sales cycles. Meanwhile, Metro-Optix already had 15 customers and 18 lab trials, and Shankar says it even sold gear during its time in limbo.

"We have loyal customers. We had half a million dollars in sales during our shutdown," Shankar boasts. After taking the reins from Dave Orr, CEO at the time of Metro-Optix's closure, he asked the company's customers to wait the eight to ten weeks needed to close a deal with an acquirer before moving on, and, he says, they stayed. Several companies expressed interest in Metro-Optix, but Shankar's team felt Xtera was the best match.

Shankar is one of about 15 employees left at Metro-Optix. It's not clear how many of those, which include engineers, contract workers, and support personnel, will remain. "It will probably take a month to two for the final number to be determined."

Meanwhile, Shankar says the goal is to integrate Metro-Optix into Xtera with "no more than a hiccup." He's moved into Xtera's Allen, Texas, headquarters and seems optimistic about the future.

The way ahead won't be easy. At least one other long-haul startup, Innovance Networks, is bent on staying in the game as well. It's likely to produce some tough competition for Xtera in a fragile, tiny market.

— Mary Jander, Senior Editor, Light Reading