Bubble Talk -- The big switch

C

chasinfla

Here's a blast from the past...(or at least bits and pieces of one).

Cyras was supposed to be the bridge to an all-optical future. Then its CEO suddenly quit. And it alienated the banking community. Is this any way to lead an industry?
By R. Scott Raynovich
<a href="http://www.redherring.com/mag/issue84/mag-cyras-84.html"><i>From October 2000 issue </i></a> <font size=1>[of Red Herring]</font>

Like a succession of optical networking companies before it, Cyras Systems was headed for a multibillion-dollar IPO....

like <a href="http://finance.yahoo.com/q?s=AVCI&d=c&k=c1&a=v&p=s&t=2y&l=on&z=m&q=l">Avici Systems</a>, <a href="http://finance.yahoo.com/q?s=sons&d=c&k=c1&t=5y&a=v&p=s&l=on&z=m&q=l">Sonus Networks</a>, and especially <a href="http://finance.yahoo.com/q?s=corv&d=c&k=c1&t=2y&a=v&p=s&l=on&z=m&q=l">Corvis</a>, the king of them all, which raised $1.1 billion in July for a market capitalization of more than $30 billion. ...

The investment community was so confident in a golden future that Cyras raised $150 million in debt bonds in late August on the expectation of a successful IPO….

In early September, CEO Stephan Pearse abruptly resigned...Mr. Pearse announced that his untimely departure was for personal reasons..."Companies come and go, but families remain together," he said.

"The right thing to do right now is to get a permanent, local CEO who will take the company public," says Mr. Pearse, who insists that the timing of his resignation was not related to problems with an IPO. "It's in the bankers' and everyone's interest for me not to have taken the company public and then to have left."

...the challenges Cyras faces include... winning business from the likes of <a href="http://finance.yahoo.com/q?s=lu&d=c&k=c1&t=2y&a=v&p=s&l=on&z=m&q=l">Lucent Technologies</a> , Fujitsu , and <a href="http://finance.yahoo.com/q?s=nt&d=c&k=c1&t=2y&a=v&p=s&l=on&z=m&q=l">Nortel Networks</a>...

Last year, <a href="http://finance.yahoo.com/q?s=csco&d=c&k=c1&t=2y&a=v&p=s&l=on&z=m&q=l">Cisco Systems</a> bought Cerent for $7 billion, and shortly thereafter, <a href="http://finance.yahoo.com/q?s=RBAK&d=c&k=c1&a=v&p=s&t=5y&l=on&z=m&q=l">Redback Networks</a> purchased Siara for $4.3 billion….


"I thought Cerent was worth every penny of what Cisco spent to buy it. You can only imagine what this company is worth," says Mark Lutkowitz, president of the telecommunications consultancy <a href="http://www.trans-formation.com/">Trans-Formation</a>…

With the optical networking market expected to reach $175 billion in 2003...

In 1998, VCs invested a total of $1.9 billion in telecommunications... In 1999, that figure rose to $5.3 billion; and in the first six months of this year, it reached $7.3 billion...
More...
<a href="http://baltimore.bizjournals.com/baltimore/stories/2002/04/29/daily17.html">Footnote:</a>
Ciena pays $178 million for Cyras debts

Linthicum-based Ciena Corp. has agreed to pay $178.41 million to investors who still hold subordinate notes of Cyras Systems LLC, a company Ciena bought last year.

The tender offer for the notes of Cyras Systems expired April 29.

Company officials said holders of $150 million accepted Ciena's offer to pay $1,189 per $1,000 in notes.
More...
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i mean think about it...this guy was looking at becoming a dotcombillionaire...and he opted to 'do the right thing.'

I was not looking for this theme when I posted this but as I reread it it jumped out at me.


I dunno...maybe they couldn't get the deal done...
 
Were any deals being done in late 2000? If not, then maybe his motives weren't so high. It'd be nice to be able to take someone at his word for a change.
 
from http://www.getgocorp.com/about.html

Steve Pearse, the former CEO of Cyras Systems who engineered their $3.1Billion buy out by Cienna Systems;
More...
and...
<a href="http://www.ciena.com/news/2001/03/03.29.2001pr.asp">CIENA ANNOUNCES COMPLETION OF CYRAS TRANSACTION </a>

FOR IMMEDIATE RELEASE
LINTHICUM, MD , March 29, 2001 –

...Based on the closing price of CIENA's common stock on Thursday, March 29, 2001, the transaction is valued at approximately $1.1 billion and will be accounted for as a purchase.
More...

Some dispute about the amounts, but looks like everyone's a little richer anyway...
 
I was a consultant for VC firms before I began my current career, and all I can tell you is that VC guys are one notch above TV evangelist (and that's a very small notch).

I want them all to fail. They've ruined San Francisco, they've ruined trust in the market place, and they've ruined the lives of many many of my friends (at least for the time being).

They didn't mind taking everyone's money, but now when the economy needs a boost, and their pockets are fat, you don't see them contributing a damn thing.

Some lawyer is going to drag these guys down. I'm not sure how and I'm not sure when, but their definitely doing something illegal.
 
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