HOT IPO FILING ALERT: INFINERA CORP.

Infinera has filed to come public via an IPO this morning.  It lists $150 million as the amount to be raised, but that is solely for filing purposes.  It has taken the proposed ticker "INFN" on NASDAQ and the underwriting syndicate is an impressive list: Goldman Sachs, Citigroup, JPMorgan, Lehman, and Thomas Weisel.

This IPO has a shot at being a HOT IPO because of its sector and clients.  Its Digital Optical Network architecture is the world’s only commercially-deployed, large-scale photonic integrated circuit (‘PIC’); its PICs transmit and receive 100 Gigabits per second.  Here is what the company says in its prospectus: We began commercial shipment of our DTN System in November 2004. In the third quarter of 2005, we achieved, and have since maintained through the fourth quarter of 2006, the #1 market share of 10 Gbps long-haul ports shipped worldwide. We have sold our DTN System for deployment in the optical networks of 25 customers worldwide, including Internet2, Interoute, Level 3 Communications, XO Communications, Global Crossing, and Qwest Communications.  I can already hear Cramer coming out on this saying how this can help with that coming bandwidth shortage. 

Infinera was founded in December 2000, originally operated under the name “Zepton Networks,” and is headquartered in Sunnyvale, California.  Its 2006 revenues were $58.7 million and that was its first year of real revenues from products, and the ratable products and related support/service portion was $53+ million of the total.  It post an operating loss of $85 million and a net loss of $89 million.  On a combined basis Level 3 accounted for 60% of its revenue in 2006.

Infinera will be making significant technology investments and warns it will not likely see any real proofits for the foreseeable future.  It also warns that it must establish a vendor specific objective evidence or all revenues for its bundled products will continue to be deferred and recognized ratably over the longest undelivered service period.  It also warns that its management and independent registered public accounting firm identified a material weakness in the design and operation of our internal controls as of December 31, 2005, which could result in material misstatements in its financial statements in future periods; although it believes it has rectified that issue.

Its backers include Advanced Equities, KPCB Holdings, Mobius Ventures, RWI Ventures, Benchmark Capital, and Worldview Technology.

Jon C. Ogg
February 26, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.