x
Gigabit

Calix Files for an IPO

Why wait for 2012? The end of the world is starting right now: Calix Inc. (NYSE: CALX) has filed to go public.

We'll repeat that while you get your jaw off the floor: Calix has filed to go public.

Light Reading has been running stories about theoretical Calix IPOs since the dawn of time (or maybe 2004). There was the time the hot access equipment startup sought an executive "to prepare the company for Sarbannes/Oxley compliance." (See Calix Picking Public Beancounters.) There was the time when sources swore that IPO paperwork was all but complete. (See Calix IPO Talk Resurfaces.) There was the CFO hiring early last year, surely a sign that something was imminent. (It wasn't.) (See Calix IPO Still on Hold.)

And don't mention all those appearances on our Top Private Companies lists. (See Light Reading's Top Ten Private Companies.)

Over the years, CEO Carl Russo has repeatedly told Light Reading that he relishes the life of a privately held company. (See Full Transcript of LRTV’s Interview With Carl Russo, CEO, Calix .) But he usually added that an IPO, someday, wouldn't be out of the question.

Of course, the fun of an IPO filing is that you get to see how much money Calix has been making -- or not. Here are the numbers from its S-1 filing today.

Table 1: Calix's Financials
2006 2007 2008
Revenues ($M) 203.6 193.8 250.5
Net income (loss) ($M) (19.5) (24.9) (12.9)
Income (loss) per share ($4.17) ($4.64) ($2.85)
Source: Calix.




For the nine months ended Sept. 26, 2009, Calix is reporting revenues of $144.6 million and net losses of $28.3 million, or $4.69 per share.

Today's filing is a preliminary one, providing no specifics on the total number of shares to be offered. For purposes of calculating the registration fee, Calix wrote $100 million as a maximum price for the offering.

The underwriters are Goldman Sachs & Co. , Morgan Stanley , Jefferies & Co. Inc. , and UBS Investment Bank .

— Craig Matsumoto, West Coast Editor, Light Reading

Page 1 / 3   >   >>
Pete Baldwin 12/5/2012 | 3:52:20 PM
re: Calix Files for an IPO

Man, who had November 2009 in the office pool?  If so, nice call.


Actually, the real IPO probably won't go til 2010, so don't pay up yet. And of course, they could just scrap the whole thing.

OSXman 12/5/2012 | 3:52:20 PM
re: Calix Files for an IPO

Wow!  Christmas comes early.  I mean haven't we all been wanting to see what Calix's top and bottom lines were? 


A couple of observations:


1.)  This will be a high profile IPO.  Underwriters are Goldman Sachs, Morgan Stanley, UBS and Jefferies. 


2.)  Calix top line about what I expected and had been told, although I am a little surprised at the weakness in 2009.  I probably shouldn't be surprised, but I just never thought about it. 


3.)  Bottom line considerably worse than I thought.  These guys are bleeding like a pig.  Their expense structure seems out of whack and they don't seem to have been appropriately disciplined.  Looks like their breakeven is about $280mm. 


4.)  I hear the targeted valuation is $500-600mm.  That's a pretty generous valuation for a company that is losing money like this. 


 


The obvious conclusion is that they are using the broadband stimulus as a hook by which to go public.  I think it's a smart thing to do.  I think they are going to be a major beneficiary of the stimulus program and that in 2010 and 2011 their income statement is going to look a whole lot better and I think they'll be making a lot of money.  That being said, in order to really create some value, they should be more fiscally disciplined.  They shouldn't need $280mm of revenue to just break even. 


 


Looks like they are hoping to value the firm at 2x revenues or even more.  My feeling is the biggest beneficary of this IPO will be Occam shareholders.  I believe that Occam should have an enterprise value about 55-60% of Calix's.  They are about 40-45% of their size by revenue, but they have a superior gross margin, are sitting on the cusp of breakeven, and they have been gaining relative share, so I feel they should have some sort of valuation premium.  If Calix can successfully be brought public at a $500mm enterprise value, then Occam shares are worth $15-20, which is only about 4x or 5x where they are today.

OSXman 12/5/2012 | 3:52:19 PM
re: Calix Files for an IPO

So, who's going to be the biggest beneficiary of the stimulus?  I keep hearing Calix and Occam.  Adtran will get their share, and Zhone and a few others will pick up some scraps, but in the end the big winners will be Calix and Occam.  Anyone agree or disagree? 

paolo.franzoi 12/5/2012 | 3:52:18 PM
re: Calix Files for an IPO

 


OSX,


One other thing, the GM issue is huge in access.  People used to joke about AFC which ran in the mid-40s.  But Litespan (when it was public) was in the high-20s and low-30s.  Now Calix was never optimized for the small carriers and probably has more like Litespan style GMs.  They have yet to cost reduce their way out of it and maybe never can.


When AFC was running at its best financials it was running about 10% of revenue in R&D and about 27% of revenue in OPEX (use say 97 as an example).  Calix is likely well above that and probably needs to reduce Opex even more.


seven


 

paolo.franzoi 12/5/2012 | 3:52:18 PM
re: Calix Files for an IPO

OSX,


As one with odd views, I think the big winner of the stimulus is going to be....Cisco.  I think when all is said and done a lot of the money is going to get spent by governments and that is Cisco's home turf.


seven


 

OSXman 12/5/2012 | 3:52:18 PM
re: Calix Files for an IPO

Seven,



I count $13-14 billion in stimulus with about 20-30% going toward equipment.  That's about $3-4 billion over a 3-4 year period.  If Cisco got 100% of that business, which of course they won't, it will raise their revenues by about 2-3% in any given year.  They will be a big winner, but it isn't going to change the way anyone views them.  They are strong and profitable and they will continue to be strong and profitable. 


For Occam, if they were to retain their market share, they will get a huge bonanza that will potentially double revenues.  They will go from break even to strongly profitable.


 


 

paolo.franzoi 12/5/2012 | 3:52:17 PM
re: Calix Files for an IPO

 


OSX,


The Stimulus package is $7B not $13 - $14B and probably only about 30% will go to access equipment at best (probably only 15%).  Their will be money spent on "mid-mile" projects, wireless, networks for schools and libraries, for engineering and installation, etc.


Occam's issue is that very little of that is going to go to DSL.  Their GPON offering is not as good as Calix's and thus will not get very much out of this.  Calix should get more.


seven

paolo.franzoi 12/5/2012 | 3:52:16 PM
re: Calix Files for an IPO

OSX,


The RUS already loaned money for Broadband Infrastructure - so the gain from the RUS loans = 0.  They loaned over $1B last year.


The gains are the grants + the NTIA money.


seven


 


 

OSXman 12/5/2012 | 3:52:16 PM
re: Calix Files for an IPO

Seven,


You are not correct.  RUS was allocated $2.5 billion capital of which $2b is grant and $500m is loans.  This is incremental.  Suggest you read some of Adelstein's testimony.  Lots on the web but let me know if you want a link.

OSXman 12/5/2012 | 3:52:16 PM
re: Calix Files for an IPO

The stimulus package is widely quoted at $7.2 billion.  The RUS has been allocated $2.5 billion of which $2 billion will be for grants and $500mm will be used as the basis for a loan loss reserve that can be levered into $7 bllion of loans.  That gets you to $9 billion or so from the RUS, before any equity component. 


The NTIA is $3.75 billion for infrastructure, to which you must add a 20% equity component which gets you a little shy of $5 blllion, and hence my $13-14 billion estimate. 


It is surprising to me how many people do not realize to what extent the RUS will be leveraging its capital. 


We'll see soon enough where the $$$ go.

Page 1 / 3   >   >>
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE