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SAN Startups on the Block

Three storage networking startups -- SAN Valley Systems Inc., TrueSAN Networks Inc., and Zambeel Inc. -- are on their last legs and rumored to be engaged in acquisition talks, sources close to these companies tell Byte and Switch.

Representatives of the three firms did not return calls or emails requesting comment.

SAN Valley, which has been operating with a skeleton crew of around 15 employees, has been shopping for a buyer for at least a year, sources say. After failing to close the second half of its Series C round of funding last summer, SAN Valley's options have been pretty much limited to getting acquired -- or getting out (see SAN Valley Slips Into Ditch).

It sounds as if SAN Valley, which makes Fibre Channel over IP (FCIP) gateways, might have a buyer. "Someone wants the technology and a few of the engineers... Sun Microsystems Inc. [Nasdaq: SUNW] is said to be at the top of the list," says an insider familiar with the company's plans. Sun declined to comment on the speculation.

SAN Valley has been doing its utmost in the past six months to prove its worth to a potential acquirer. Quarter by quarter, the company has been demonstrating a constant trickle of orders for its products. Among other recent customers, it has lined up Seker Bank in Turkey and Cable & Wireless (NYSE: CWP) in the Caribbean (see SAN Valley Still Growing, Credit Union Installs SAN Valley, and SAN Valley Doubles Revenues).

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