Pluris, Gotham confirm closures
 
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Start-up companies Pluris Networks and Gotham Networks have confirmed reports that they have ceased operations.
Pluris, a maker of Internet core routers that raised over $200 million since its founding in 1997, ran out of cash before realizing revenue and couldn't convince investors to up the ante. There was no telling when that revenue would come, given the current climate of sharply reduced capital spending among service providers, according to Cynthia Ringo, Pluris' interim CEO.
"The investors decided not to continue investing, given the macroeconomic issues in the telecom sector," Ringo says. "There's just such an incredible lack of visibility into when service providers will actually start spending again. That makes it very difficult to determine how much money you need to raise or have on hand in order to keep a company adequately funded."
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Pluris raised $53 million in its latest round of funding last February.
Ringo says Pluris' TeraPlex router was performing well in current trials - it was in field trails with Deutsche Telekom and initiated trials at two North American service providers earlier this year - and had six more lined up when investors pulled the plug. TeraPlex was designed to scale to terabit speeds.
"That kind of product is an expensive product to build, and that means your burn rate is reasonably high," Ringo says. "We had certainly done everything we could to bring the burn rate down as low as we could, but even at that the funding requirement was quite extraordinary. It made it very hard to figure out how to get a venture return on the investment."
Signs that Pluris might be in trouble emerged last March, when CEO Joe Kennedy left the company after the February funding round, which company officials described as a "battle" with investors. Ringo replaced him on an interim basis within weeks.
Gotham, a maker of multiservice edge switches, posted a message on its Web site that it had shut down. Unconfirmed reports of Gotham's closure emerged two weeks ago.
"With deepest regret Gotham Networks announces termination of operations," the company's site states. "Gotham Networks was severely impacted by the significant downturn in carrier capital spending affecting the telecom service providers."
The company was awaiting a purchase order from Qwest and funding from Ciena but neither materialized in time for Gotham to survive. Gotham raised $33 million since its founding in 1999.
The company's GN 1600 and GN 400 switches were designed to compete against multiservice Layer 2 switches and edge routers from several incumbent vendors and start-ups. The GN 1600 was in its second year of trials, and was completing final certification testing last month for deployment in a Tier 1 network, Gotham says.
"Gotham Networks would like to thank it employees, investors, suppliers and business partners for the extraordinary amount of commitment of time and resources," the company’s site states.
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