Santur Reaches for 100-Gig
In that sense, the funding, announced today, could be a major turning point in Santur's history. "In 2011, it's quite likely 100-Gbit/s will overtake the tunable lasers in terms of proportion of the business," CEO Paul Meissner tells Light Reading.
The money -- being applied to the development of 100-Gbit/s products -- is coming from Santur's previous investors: Menlo Ventures , Sequoia Capital , and VantagePoint Venture Partners . Santur has now raised at least $108 million over the course of eight years, although that includes bubble-era money that's certainly been washed out by now. (See Santur Lands $13M.)
Santur last raised money in 2007, a $26.5 million fourth round that was supposedly going to be enough to take the company public. (See Santur Raises $26.5M, Talks IPO.) This time, the goal is more modest: Santur wants this money to last until the company is back to cashflow breakeven. (Santur had reported being breakeven in 2007.)
"Our forecasts are that by the end of next year, we should be there. We don't know if it will be in Q3 or Q4," Meissner says.
He adds that Santur's cash burn is "well under" $2 million per quarter, meaning the new funding won't be dried up as Santur approaches the end of 2010.
For most of this year, sources around the industry have perceived Santur to be in trouble. The company laid off about half its staff in the spring, and even before then, there were questions about how its tunable laser franchise was standing up to new competition from Bookham -- now Oclaro Inc. (Nasdaq: OCLR) -- and JDSU (Nasdaq: JDSU; Toronto: JDU). (See OMG! Bookham Is Profitable!, Ciena Tunes In Bookham, Doink! JDSU Hits Capacity Ceiling, and JDSU, Emcore Shrink Tunables.)
Business did drop off due to the recession, and that's one reason why headcount is at 150 now, versus 290 in late summer 2008, Meissner says. But he says most of the cuts had to do with Santur transferring some functions to offshore contract manufacturers.
The company still runs a fab in Fremont, Calif., where it's still making its lasers with integrated Mach-Zender modulators. It's also using the fab for building any future products -- such as its 100-Gbit/s devices.
The next franchise
Santur is one of the few companies offering 100-Gbit/s optical modules in the CFP format. Opnext Inc. (Nasdaq: OPXT) has also begun sampling CFPs. (See Opnext Tackles 100G and Group forms 40G/100G MSA.)
Santur started out by developing a 100-Gbit/s laser assembly, consisting of 10 or 12 lasers and an arrayed waveguide used as a multiplexer. It's a derivative of the company's tunable laser technology, which uses a 10-laser array and a micro-electro-mechanical systems (MEMS) device that selects one of the 10 for transmission. (See Santur Girds for Battle.)
But because the CFP is so new, Santur has been making full modules, too -- the PD100-TX and PD120-TX being the 10- and 12-laser versions, respectively -- counting test-and-measurement companies among its first customers. EXFO (Nasdaq: EXFO; Toronto: EXF) announced it's using Santur's module. (See EXFO Unveils 100GigE Tester.) Meissner says Ixia (Nasdaq: XXIA) likewise used Santur for an Interop demo in May.
This isn't necessarily a permanent move. Although Meissner won't commit verbally to a specific plan, he says Santur would be OK going back to selling just devices, or it could go on making full modules, depending on how the 100-Gbit/s market develops. "I'm not attempting, as a conscious strategy, the 'move up the food chain' thing," he says.
Competitors such as Opnext claim Santur's module isn't quite standards-compliant, but Meissner claims the parallel-array approach makes for easier integration, which is partly why Santur could get to market early.
The 100-Gbit/s market is going to take years to solidify, but once it does, Meissner envisions a franchise of devices including multiple 100-Gbit/s products and devices built for longer reaches. (It's the very short reaches -- box-to-box connections -- where 100-Gbit/s is in demand right now.)
Santur did have a top spot in tunable lasers early on, but it's been losing share, according to Ovum RHK Inc. JDSU and Bookham/Oclaro have been counting tunable lasers as a major growth sector. Other competitors in tunable lasers include CyOptics Inc. , Emcore Corp. (Nasdaq: EMKR), Eudyna Devices Inc. , and Ignis ASA . (See Bookham, Avanex Form Oclaro, ExceLight & Eudyna Combine , and Ignis to Acquire Syntune.)
Note that three of those six names have changed in less than a year (Ignis bought Syntune, and Eudyna is getting folded into a Sumitomo Electric Industries Ltd. unit). That points to another difficulty Santur faces: The optical components industry is coming off a small wave of mergers, as mid-sized players start looking for the product breadth they think they'll need to survive. The four major players emerging from this phase are Finisar Corp. (Nasdaq: FNSR), JDSU, Oclaro, and Opnext.
Meissner contends Santur can stand its ground. Being smaller "doesn't hamper us today, because most of our customers view us as a strategic supplier. As soon as we're out competing on cost, on a commodity basis head-to-head, then that's a problem."
— Craig Matsumoto, West Coast Editor, Light Reading