Corvis, Avici Bide Their Time

Avici Systems Inc. and Corvis Corp.: two IPOs taking their sweet time to get to market.

The companies filed for IPOs in May, but their potential public debuts have been pushed to the week of July 24, at the earliest, according to several sources in the financial community. Wall Street has become more skittish with companies that have little or no revenue--a description that fits both Avici and Corvis. The companies may be buying some time to lock in new customers or prepare large contracts they can show investors interested in buying their stock.

"In this market, you either have to have revenue or visibility," says Max Schuetz, analyst with Thomas Weisel Partners. "It has to be a big customer."

Corvis and Avici are expected to launch their investment road shows in the next week. The road show is the pre-IPO ritual in which company executives travel the globe, selling their story to fund managers and other investors who may be interested in buying the stock. Lack of revenue may be an issue for both companies on their road shows: In the S-1s filed by the two vendors with the Securities and Exchange Commission (SEC), Corvis reported zero revenue and Avici reported $504,000 of revenue in the first quarter of 2000.

Schuetz notes that Corvis, at least, may have the "visibility" to punch it through into the public markets, because CEO David Huber, founder of Ciena Corp. (Nasdaq: CIEN), is a known quantity on Wall Street. The company is also backed by the well-regarded VC firm Kleiner Perkins Caufield Byers and recently completed a handful of successful product trials with customers (see Corvis Completes First Field Trials). Lacking information, Schuetz declined to comment on the prospects of the Avici IPO.

Several companies could be waiting in the wings in the hope that a sudden Wall Street downturn would dash IPO hopes. Corvis' core long-haul optical technology, in particular, would be attractive to a number of suitors.

--R. Scott Raynovich, Executive Editor, Light Reading (http://www.lightreading.com)
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