Yipes reorganizes and comes back from bankruptcy
Company will offer Ethernet services in 10 markets.
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Metro Ethernet pioneer Yipes Tuesday emerged from Chapter 11 bankruptcy when the newly formed Yipes Enterprise Services bought the majority of the assets of the bankrupt Yipes Communications.
Yipes Enterprise will continue to serve 10 of the original 13 Yipes markets, while three markets - South Florida, Boston and Pittsburgh - were sold to telecom provider E-xpedient. E-xpedient, which like Yipes targets business users in multitenant buildings, now has operations in 15 cities.
Yipes will continue to offer its customers the same services the company has offered up to now, the company's new President and CEO Dennis Muse says.
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Muse joined Yipes Communications in January as COO and played a large role in the company's bankruptcy proceeding and reorganization.
Much of Yipes' original management team remains in place, including Kamran Sistanizadeh, a co-founder and the firm's CTO.
Norwest Venture Partners is backing the new Yipes with a $40.8 million Series A round of financing. A second round of $13.2 million is expected later this year.
Muse says that the financing will be enough money to see Yipes through to a cash-flow positive state in less than 20 months.
The reason Yipes can make its business plan work now is that the company has renegotiated all of its supplier contracts to bring the company's expenses down dramatically. Most of Yipes' original supplier contracts were negotiated during the boom years of 1999 and 2000. When the telecom market began to slide in 2001, Yipes' revenue could not keep up with the company's high expenses.
Muse says Yipes will concentrate on getting to cash flow positive in its 10 existing markets before it considers expanding to other cities.
Former Yipes customers in the markets sold to E-xpedient should be able to get the same services they got under Yipes, Muse says. E-xpedient purchased Yipes fiber and equipment in the three markets as well as the customers.
The only service the former Yipes customers won't have access to is Yipes Now, an offering that allows users to add bandwidth on the fly, almost instantaneously.
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Contact Senior Writer Michael Martin
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