Citing a vanishing market for its products, Kanata, Ont.-based network architecture player Sedona Networks Corp. declared bankruptcy and closed up shop on March 30.
According to Joseph Elchakieh, president, CEO and founder of Sedona, he chose to shut down the company at a time when its customers (competitive local exchange carriers) were rapidly vanishing and Sedona still had some money in the bank. In a word, he said he took the “elegant” approach to shutting down the company.
“Our market disappeared,” he said. “It was unfortunate for all of us.”
Elchakieh said he is spending some time with his family before looking for a new entrepreneurial venture.
One analyst said it came as no surprise to him when Sedona became the most recent fatality in the troubled network hardware market.
“Everybody knows it’s a difficult time in high-tech right now, but that being said, (it is) particularly (difficult) for newcomers,” said Lawrence Surtees, a senior telecommunications analyst at International Data Corp. (IDC) Canada in Toronto. “Unless you’re well-financed with oodles of money in the bank, it’d be very difficult for a company that was even older and bigger.”
Surtees added the company seemed to be in the early stages of doing business. He said he met with Sedona and was briefed on its business and products, but that the company did not make its purpose or strategy clear.
Sedona made its formal debut at ComNet 2000 in Washington in January 2000 with the launch of its Services Internetworking Architecture platform for bundled network services. As a designer and builder of network architecture, Sedona launched products throughout the year tailored to integrating hardware and software elements together to solve network access challenges. And according to the company, its Services-aware Access Architecture (SAA) product could reduce IP address consumption in an access network by more than 75 per cent.
In 2000, the company secured US$26 million in financing. North Bridge Venture Partners of Waltham, Mass. still listed Sedona in its portfolio of companies as of press time. North Bridge would not comment on the Sedona downfall.
All seemed to be going well when the Ottawa Board of Trade (now the Greater Ottawa Chamber of Commerce) named Sedona its New Business of the Year in November 2000.
“I don’t put much truck in awards,” Surtees said, adding that an award is not indicative of how well a business is going to do. “It’s unfortunate for the Board that they honoured them, and then [Sedona] closed their doors.”
At the time of the award, the company said it planned to increase its 160-employee staff to 200 by the end of 2000. Sometime between November and March, things took a turn for the worse. According to a statement issued through Sedona’s public relations firm on March 8, “Sedona Networks released 47 permanent employees as part of a complete corporate restructuring.” The company blamed the downturn in the telecommunications market for the layoffs and said it was revamping its corporate strategy. Three weeks later, the company filed for bankruptcy and laid off its remaining employees.
