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Optical/IP

Xtera Nabs Metro-Optix Assets

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
dodo 12/4/2012 | 11:29:21 PM
re: Xtera Nabs Metro-Optix Assets "We have loyal customers. We had half a million dollars in sales during our shutdown"
zettabit 12/4/2012 | 11:29:19 PM
re: Xtera Nabs Metro-Optix Assets ....I just don't get how the shareholders (ie: VCs) and board could have approved this deal. This is akin to Xtera going out and buying a MacDonald's franchise until the market for its core products (re-)appears.

It is inconceivable that the board has allowed the company to continue despite a lack of market for its products, and/or a lack of competitive differentiation.
TelCoEngineer 12/4/2012 | 11:29:18 PM
re: Xtera Nabs Metro-Optix Assets Yeah, right.

Half a million dollars in computers, office supplies, desks, chairs and a probably a pool table.

/sarcasm off
listen2this 12/4/2012 | 11:29:18 PM
re: Xtera Nabs Metro-Optix Assets how does one sell its assets?
aren't the engineers that developed the
products the assets? aren't they the ones
that update the product and deal with bug fixes
and add features for new customers?
Kris_Shankar 12/4/2012 | 11:29:15 PM
re: Xtera Nabs Metro-Optix Assets Sorry to disappoint you. Despite the lack of transparency plaguing our industry, I still live in a world where integrity counts. The post-shutdown sale involved DS3s, optical I/Os, ATM and 3/1 DCS fabrics, directly relevant to our deployed applications.

Would be glad to furnish audited proof for a sufficient-enough economic motive. Otherwise, this diatribe could continue ad nauseum without a meaningful conclusion ;-)

Kris Shankar
Focus 12/4/2012 | 11:29:12 PM
re: Xtera Nabs Metro-Optix Assets No doubt they were real sales but could it be:

1. MO implodes and customers with deployed gear realize they have bought a potential lemmon....no future spares or support for their networks?
2. MO has inventory that they can supply at a reduced price to any customer wanting to buy insurance for their investment? A fire sale of sorts.

I can't for a second believe that customers were making rationale purchasing decisions to a company just cut down and with an uncertain future. During a period of uncertainty, it just looks like a desperate move by your embedded base.

The $500k would have been a better statement if it came after Xtera adopted you.

captain kennedy 12/4/2012 | 11:29:10 PM
re: Xtera Nabs Metro-Optix Assets Engineer = Asset...What rock have you been hiding under ;)
stuartb 12/4/2012 | 11:29:07 PM
re: Xtera Nabs Metro-Optix Assets My understanding is that these guys had their products deployed with about 12-15 paying customers. It's certainly feasible that they sold half a million dollars worth of line cards and switch fabrics to these customers in a fire sale. I seriously doubt that any of them will risk continuing investing in this product though.
billy_fold 12/4/2012 | 11:28:58 PM
re: Xtera Nabs Metro-Optix Assets Wouldn't the Xtera customers be a totally different set than the Metro-Optix customers?


-billy
dodo 12/4/2012 | 11:28:57 PM
re: Xtera Nabs Metro-Optix Assets Partially

e.g:
One of Xtera "wish-list" customers in the white North (they decided to stay with a legacy vendor in the end) has also metro networks.

Hence it depends.
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