Pluris, a once promising company, burned through $215 million during the past few years as it attempted to build a high-end router that was intended to outclass similar products from competitors such as Juniper Networks and Cisco Systems.
Now Pluris has ceased operations and turned its assets over to San Francisco-based Sherwood Partners, which will sell them for the benefit of creditors, according to a Pluris executive.
Pluris had 165 remaining employees that have been let go as a result of the closure. A handful of employees will be retained as consultants while Sherwood completes the asset sale.
In the end, the company had problems completing its product and, more importantly, finding customers who wanted to buy its technology. One such customer, Global Crossing, used Pluris' gear in trials, but is now in the midst of one of the largest Chapter 11 bankruptcy reorganizations in history.
Pluris had completed about five trials with customers and had another six trials in the pipeline, but had yet to collect any revenue, according to Cynthia Ringo, Pluris' interim chief executive.
The company announced a $53 million round of funding in February. But that infusion was not enough for the company to overcome skittish investors and a brutal market for start-up networking equipment. Ringo said investors intended to give the company that funding in two installments. Looking at the current market demand, investors declined to fund the second portion, she said.
"It's clearly a heartbreaking situation," Ringo said in an interview Wednesday. "Pluris clearly had an extraordinary product."
What the company couldn't predict, however, was when the "real revenue" would be coming, she said.
Pluris was attempting to produce a high-capacity router that could top even the most expensive technology from Cisco and Juniper at less cost. But a decline in the fortunes of the network operators who might be interested in technology from Pluris likely forced the company to shut down, rather than continue as a bare-bones concern.
A telling sign came in March when former Chief Executive Joe Kennedy left the company. Interim Chief Executive Ringo joined the company in May.
The final $53 million round also rendered the holdings of several early investors worthless and prompted a reverse stock split at the company, according to one former employee who wished to remain anonymous. Such financial rejiggering is often called a "wash out" round of financing as a company devalues itself to reflect current market conditions.