Amber Suiting Up for IPO?

All of the signs indicate that Amber Networks Inc. is preparing to file for an IPO.

The company has been following the IPO formula for the networking industry, circa 2000. Massive funding round? Check. Investment bankers included in the round? Check. Addition of prominent board members? Check. Developing equity relationships with prominent telecommunications carriers? Check.

Last month, Amber announced a $91 million round of funding. Yesterday, they added Mory Ejabat, Chairman and CEO of Zhone Technologies and former CEO of Ascend Communications Inc., to the board of directors. Amber has also been talking to both Enron Corp. (NYSE: ENE) and Williams Communications Group (NYSE WCG) about potential contracts, according to several sources. Williams and Enron both own equity in Amber after participating in the last round of funding.

Amber CEO Sam Mathan would not confirm immediate plans for an IPO.

"We're not planning any additional funding rounds right now, either private or public," said Mathan, reached Wednesday by phone.

The last round of funding included a diverse number of institutions, ranging from venture capitalists to the Government of Singapore Investment Corporation. The round was also filled with investment banks, including Banc of America Securities, Chase H&Q's Access Technology Partners LP, Credit Suisse First Boston, and Morgan Stanley Dean Witter, indicating the company is being prepared for an IPO. Morgan Stanley and Credit Suisse have been especially active in underwriting the leading IPOs in the networking sector.

Next step? Look for Amber to firm up its relationships with some of the leading carriers. The company does not yet have revenues, but that hasn't stopped companies such as Corvis from going public at a massive valuation. To make up for the lack of revenues, Corvis officials beefed up the company's S-1 filing with the announcement of customer contracts, including those from Williams and Broadwing Inc. (NYSE: BRW), each of whom either invested in Corvis or received warrants or shares in the IPO at the offering price.

In addition to discussing customer trials with Enron and Williams, Amber is looking at a wide range of carrier partners that would include Independent Local Exchange Carriers (ILECs) and Building Local Exchange Carriers (BLECs), said Mathan.

Amber's first product, an edge router, is designed to fit into the carrier networks by merging disparate traffic types such as TDM, Frame Relay, ATM, and IP into optical network backbones, with a fault-tolerant spin (see Amber Illuminates Edge Product).

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