Mayan Goes Public ...

In what might turn out to be a game of real-life survival, struggling startups are beginning to pull off interesting financial moves in efforts to stay afloat through difficult economic times.

On Wednesday evening, Mayan Networks announced plans to purchase Ariel Corp., a publicly traded maker of remote-access servers. Known as a reverse merger, the purchase of Ariel by Mayan, a private company, will eventually allow Mayan's stockholders to trade shares on the Nasdaq stock exchange.

In addition to giving Mayan's workforce the opportunity to hold a stake in a public company without going through the process of an initial public offering, the move appears designed to give Mayan a mature product line that it can use to generate revenues until the company's next-generation Sonet gear catches on with carriers.

"The combination will allow us to market unique new Sonet-enabled solutions to carrier and ISP remote-access server needs while continuing to pursue our current products and markets," said Esmond Goei, the chief executive of the combined companies, in a prepared statement.

The purchase maneuver seems in line with previously announced plans by Mayan executives to enact belt-tightening measures, including some workforce cutbacks. That move, said Scott Lukes, director of corporate marketing at Mayan, was designed to help Mayan conserve cash reserves in the face of a slowdown in spending by potential customers, especially competitive carriers.

Mayan recently announced its first customer.

Analysts are predicting that similar financial deals could be on the horizon as dozens of startups that were well funded one or two years ago are nearing the end of the development cycle of initial products. Unfortunately, this flood of new products comes during an economic slowdown. Many of the CLECs that were expected to form an aggressive customer base for these new products have been driven out of business or are themselves strapped for cash.

To compound the problem created by the lack of customers, startup equipment makers are also finding it increasingly difficult to secure additional funding from new or current investors.

Point Reyes Networks, a maker of next-generation service-provisioning gear, pulled out of the Optical Fiber Conference after failing to secure a second round of funding. Talking a cue from Mayan, Point Reyes founders have apparently found a way to keep their product plans alive.

A spokesperson for Point Reyes announced last week that Cemip Networks had purchased the company's intellectual property. Although little information is available about Cemip, the company is expected to introduce its product plans sometime in early May.

Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in The Net Economy.