IronBridge, which laid off 90 percent of its staff in late January, built a high-speed networking device to compete against networking giant Cisco Systems, Juniper Networks and Avici Systems.
The company will file for Chapter 7 bankruptcy protection, meaning the company will liquidate all its assets, IronBridge Chief Financial Officer Nick Pettinella said in an interview Wednesday night.
It is unclear whether company attorneys have already filed with the U.S. Bankruptcy Court. IronBridge attorneys were expected to file the bankruptcy Wednesday morning, but could not be reached for comment at press time.
The 3-year-old start-up laid off 170 employees in late January after the company failed to secure an extra $100 million in financing. A small group of about 15 to 20 employees remained to look for more venture capital or a buyer.
Analysts say IronBridge is the latest victim of the slump in the overall technology sector, where several companies have missed financial earnings, and stock prices have plummeted. Networking companies have not been immune to financial woes, with Nortel Networks, Lucent Technologies and 3Com all announcing recent profit warnings.
But IronBridge is also a victim of an investor that had a change in plans.
Gartner analyst Bob Hafner says the apparent bankruptcy of IronBridge Networks demonstrates the cutthroat nature of the high-end router market dominated by Cisco Systems and Juniper Networks.
Analysts say IronBridge built technology that would have competed well in a market dominated by Cisco and Juniper. The market for high-end routers, used by telecommunications carriers to build faster networks, is expected to grow from $4.5 billion in revenue in 2001 to $12.7 billion by 2003, according to market research firm RHK.
"It's disappointing to put two years of your life in this, but our timing was bad for raising money," said one former IronBridge executive, who spoke on condition of anonymity. "We had a talented engineering group and a good product. It's a hot market. We thought we were in good position to build a significant company and make an impact on the market."
The company's executives said previously that $100 million in funding fell through in early December because venture capitalists became skittish about the current state of the technology market.
The company, which claimed to have two telecommunications service providers testing its products, needed the extra funding to manufacture its products and increase its marketing and sales staff, executives said.