Meru'ned?

By now you've probably heard that Meru is going public, having filed its S-1 with the SEC. 

Today, Aruba is really the only pure-play, publicly-held wireless LAN company. For better or worse (mostly for worse up to now as the market has under-valued the company bashing their stock in 2008), Aruba has become the ruler against which all others are measured with respect to valuation. So having Meru out there will be another good data point.  Or will it?

We'd LOVE to see Meru come out with a HUGE IPO. But this company is ill.

A closer look (if you can see it...sorry it's so small) at their balance sheet (click on graphic, left) shows a company that has struggled, having raised a boatload of capital ($126M in equity plus $27M more in debt).  Over the past year, Meru's invoiced product and services has largely remained flat. Invoiced product and services for the 9 months ended Sept. 30, 2009, were $41.2M versus the 9 months ended Sept. 30, 2008 which were $40.5M.

Apparently from Meru's S-1, Series E holders have a ticking time bomb on their hands.

<SNIP>

"In the event that we have not completed an initial public offering of our common stock or a reverse merger into a public company by March 31, 2010, we would be required to pay $0.6 million to a holder of our Series E convertible preferred stock. If we still have not completed an initial public offering of our common stock or reverse merger into a public company by April 15, 2010, we would be required to pay an additional $0.6 million, and an additional $0.2 million would be due each month beginning April 30, 2010 until the completion of an initial public offering of our common stock or reverse merger into a public company."

<SNIP>

And while their "big MAC" (single channel blanket) architecture is technically notable, it is highly complex, expensive and riddled with issues. Given that all the APs on a "blanket"  share the same channel, coping with interference or environmental changes that cause performance fluctuations is effectively impossible. Throughput is also limited though Meru claims they can have three discrete blankets (on channels 1,6,& 11) in the 2.4GHz band. According to former employees, more often than not, their single channel blanket architecture is not even implemented due to the inability to get it to work properly and stay working properly.

All that said, to go public in today's economy, you need three quarters of consistent profit, visibility in future revenues, a demonstrable differentiation and diversification across products, customers, markets and geographies. The problem is, Meru has none of this.

And finally, the company has really struggled to retain key staff and senior execs. 

• Bob Bruce former VP of channel sales. Gone.
  
• Dan Steimle, former chief financial officer. Gone.
• Steve Troyer, former VP of product marketing.  Gone. 
• Fred Corsentino, former VP of sales. Gone. 
• Anil Batria, former VP of international Sales. Gone.
• Michael Tenefoss, former VP of marketing. Gone.
• Keith Matasci, former VP of operations. Gone.
• Tushar Kothari, former SVP of field operations. Gone.

It's a soap opera. The bottom line is that these are not signs of a stable company. 

But still, we're still crossing our fingers, legs, toes and every other appendage we have at our disposal in the hopes Meru can pull this off.  Ultimately, these are some very smart people.

Comments

[Thomas Robert]

Will this doom the future investors as well as current Series E investors?

[Sucker Wireless]

Post really looks like Rant. it lives upto your title.
One executive's name in your list is still there in S1. This list is quite old also.

Reference from your *former employee* is also outdated.
Grapes are Sour !!
Get Real and Stop Barking.

[Mike]

It does sound like a rant. If Ruckus has to resort to mud slicking to show they 'might' be better, then that tells me that can't actually deliver.

How about fighting technology with technology?

Hearsay from ex-employees is just that. Hearsay.. rumours. No value at all.

Personally, Meru's single channel architecture just actually works. Expensive up front, but easy to deploy, easy to maintain, and very few service calls from customers. Beamforming is a great idea, but it just doesn't scale. How to you handle reflections?

Short point is the micro-channel architecture just does not scale.