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All About Calix

Stealthy startup Calix is building a super-scaleable access box

October 3, 2001

4 Min Read
All About Calix

These days, even companies with lots of promise are choosing to remain stealthy, given the uncertain economic conditions.

Take Calix Networks, which was founded two years ago this month but remains officially in stealth mode. The company, which is targeting the access network, is believed to have nearly 300 employess and has raised more than $100 million in venture capital, but it's in no rush to tell the world what it's doing.

Sources familiar with its plans say Calix is focused on eliminating the bandwidth bottleneck between the metropolitan area networks (MANs) surrounding cities and the businesses and residences within the cities. The product is targeted toward incumbent carriers that want to migrate to fiber-based services but need to protect their legacy telephone business at the same time.

"They're building a local loop box that is very scaleable and flexible," says one source close to Calix. "Their thinking is that what has been good for the metropolitan area networks is good for the access network. You can expect that it will be much more than an optical transport system for the access space. It will have a high-speed backplane and use advanced ASICs so carriers will be able to add new data services as soon as subscribers demand them."

The quiet startup has gained notoriety because of its influential backers, including the contract manufacturer Flextronics International (Nasdaq: FLEX) and Carl Russo, vice president of optical strategy at Cisco Systems Inc. and the former CEO of Cerent. Calix is located in Sonoma county, Calif., the home base of a number of pioneering optical companies, including Advanced Fibre Communications Inc. (Nasdaq: AFCI) and Cerent (which was purchased by Cisco).

Calix's vice president of optical products, Tom Corker, wrote an article for Lightwave magazine in July that gave some glimpse into the company's thinking and product plans. Corker's article describes the need for a box built with a line card and chassis architecture that combines several transport and access technologies and could speed the rollout of fiber-based services to businesses and residences.

Like a digital loop carrier (DLC), the box Corker describes would provide copper connections that fan out from a telephone central office or controlled environment vault. Along with digital subscriber line access multiplexer (DSLAM) functions, Corker writes, a new class of optical access platforms should provide add/drop multiplexing for Sonet, DWDM, and gigabit Ethernet services. The box should also use embedded edge switching, routing, and digital crossconnect functions working together to "process, groom, and manage any combination of TDM, cell, and packet traffic, including ATM, frame relay, and IP/MPLS."

Light Reading's director of research, Scott Clavenna, has also opined on what kind of access box carriers need right now, noting that Calix's box appears to be the most flexible and to support the broadest range of applications (see Dig This).

Such product descriptions, while not technically specific, do at least establish that Calix is not a direct competitor with Cisco's Sonet multiplexing equipment based on the Cerent acquisition (Nasdaq: CSCO), as had been previously assumed (see Theft Case Shines a Light on Calix ).

Instead of Cisco, Calix's competitors appear to include broadband loop carriers such as Occam Networks and Catena Networks, a startup whose product integrates DSLAM, DLC, and media gateway functions while eliminating the need for residential integrated access devices.

Other Calix competitors would include optical access router maker Xalted Networks Inc. and next-generation digital loop carrier makers such as Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Marconi Communications PLC (Nasdaq/London: MONI), Advanced Fibre Communications Inc. (Nasdaq: AFCI), Lucent Technologies Inc. (NYSE: LU), and Integral Access Inc.

So, what about that burn rate? Research points to the company being well funded. As of December 31, 2000, Calix had gross assets, including cash, inventories, and loans to shareholders, totaling $74,202,439, according to documents obtained by Light Reading. The company took another large round of funding in March, though company officials will not confirm the amount. According to a June 15 Wall Street Journal article that Calix posts on its Website, the company has raised $158 million in funding, employs 275 workers, and carried a valuation of $525 million earlier this year

Assuming the company has between 200 and 300 employees, its burn rate would be between $20 million and $40 million per year, to judge from industry averages.

Calix's board members include Michael Hatfield, Calix's president and CEO; Ajaib Bhadare, one of Cerent Corp.'s cofounders; Cisco's Russo; and Paul Ferris, a partner at Azure Capital Management.

The company's investors include Azure Capital Partners, Flextronics, Integral Capital Partners, Meritech Capital, Michael Dell's MSD Capital Partners, Pivotal Asset Management, Redpoint Ventures, and several individuals, including Russo.

The company's managers hail from digital loop carrier makers such as Advanced Fibre Communications and Optilink Corp. (Optilink was bought by DSC Communications in 1990; DSC was bought by Alcatel in 1998). Most of the top managers have also worked at Cerent. A former engineer in Alcatel's Litespan division, Jason Dove, is said to the primary architect of the Calix product.

Calix declined to comment for this article.

- Phil Harvey, Senior Editor, Light Reading

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