Cisco, Corning Invest in LightPointe

Free-space optic startup, LightPointe Communications Inc. announced this morning that it has raised $33 million in its second round of funding. Cisco Systems Inc. (Nasdaq: CSCO) and Corning Innovation Ventures, a division of Corning Inc. (NYSE: GLW), have signed on as investors.

“We think that the investment by Cisco and Corning is more than just money,” says John Griffin, president and chief executive officer of LightPointe. “They are class A companies, and their involvement does a lot to validate the FSP space.”

These aren’t the first big-name companies interested in free-space optics, which uses lasers to transmit traffic through the air instead of through fiber. Nortel Networks Corp. (NYSE/Toronto: NT) and Lucent Technologies Inc. (NYSE: LU) have both invested in this area (see Nortel And Lucent Compete For Air Time ). Nortel has a stake in a company called AirFiber Inc. that has developed a solution to set up mesh networks using ATM switching. And Lucent made an early investment in Terabeam Corp., a company that not only is developing its own free-space optic technology but is also operating as a service provider.

These companies have had investments in FSO for over a year and still the market hasn’t exploded. Why not? LightPointe’s executives say that it has more to do with the companies, rather than the sector itself. They say that Terabeam hasn’t been overly successful yet, because it has taken a service provider approach. They also don’t see AirFiber getting much traction, because it is touting a network architecture, rather than a topology-independent solution.

“We allow providers to deploy whatever topology they want,” says Baksheesh Ghuman, chief marketing officer for LightPointe. “The other thing is we have the technology today. That’s why Corning and Cisco wanted to invest in us.”

Unlike other startups out there, LightPointe has been shipping product since 1998. It has already generated revenue from its products in the enterprise market. Now, with its higher capacity product that scales to 2.5 Gbit/s, the company is moving into the metro area network to help service providers extend the reach of their fiber networks.

This is exactly why Corning was interested in LightPointe, says Greg Smith, president of Corning Innovation Ventures. At first it might seem strange that Corning, a fiber provider, would be investing in a free-space optics company -- a technology that competes with its own fiber products. But Smith says that because LightPointe’s solution can be deployed in a fraction of the time it takes to install new fiber, customer fiber rings can be extended and generate revenue more quickly.

“For a customer that is tenuous at best, this is a way to get them on board fast,” he says. “And if their data rates go up, they’ll be more likely to replace it with fiber down the road.”

Right now, LightPointe’s relationship with Corning is still at arm’s length. “We might recommend them to a customer, but we’re not reselling their gear,” says Smith. On the other hand, Cisco has included LightPointe in its vendor ecosystem, which means that it will work with customers to integrate the technology into its customers’ networks and will help market its solutions to them.

First-round investors Ampersand Ventures, Sevin Rosen Funds, and Telecom Partners also participated in the second round. LightPointe raised a total of $12 million last September in its first round of funding and secured an additional $6.5 million in working capital earlier this year from Silicon Valley Bank and GATX Ventures (see Fog Clears for Free-Space Optics). In total, the company now has raised more than $51 million.

- Marguerite Reardon, Senior Editor, Light Reading

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Ted F. 12/4/2012 | 8:03:32 PM
re: Cisco, Corning Invest in LightPointe I agree with John. Too much "my company has a bigger..." -trash talking. All these rumors have no validity when it's obviously coming from competing employees. No objective opinions here... these boards suck, Beavis
john1 12/4/2012 | 8:03:35 PM
re: Cisco, Corning Invest in LightPointe In my opinion a message board should not be abused by persons, who are employed at a company which is discussed in this board, specially if a link on this company's website points directly on this board. Furthermore, such a board shouldn't be abused to post bad rumours (about open invoices of any competitor).
realoptics 12/4/2012 | 8:03:44 PM
re: Cisco, Corning Invest in LightPointe My friends told me that Optical Access is not paying its vendors, a lot of overdue payments to its components vendors, some are 90 days old,its vendors are calling everyday to ask for the money, it is not a good sign in today's economical/investment conditions.

optics5 12/4/2012 | 8:03:46 PM
re: Cisco, Corning Invest in LightPointe SO you think both Cisco and Corning are idiots to invest in a company that you accuse of being just enterprise. Just shows how you think- probably without thinking.

In this market getting cisco and corning is an achievement. My contacts tell me that LightPointe is sitting on something big- just a matter of time.

john1 12/4/2012 | 8:04:41 PM
re: Cisco, Corning Invest in LightPointe Just look for the latest "succes stories" on the Lightpointe website. There are not so many. And, it seems they have customers in the enterprise market only...
duffeck 12/4/2012 | 8:04:42 PM
re: Cisco, Corning Invest in LightPointe "Only 20% was the result of free space sales."

You have a point but the pro forma contributions for Jolt and Astroterra were actually 30.4% of Optical Access pro forma sales for the 9 months ending 9/30/2000. The following numbers come right out of the S-1 filed 12/18/2000.

Optical Access's "pro forma" sales for the first 9 months of 2000 were $17.676M. There actual sales for the same period were $14.708M including a $1M contribition from Jolt for the period of May 1st through Sept 30th and a $1.4M contribution from Astroterra for the period of July 12th through Sept 30th. So backing out the contributions of Jolt and Astroterra Optical Access earned $12.3M for the 1st 9 months of year 2000. Since the pro forma Optical Access sales were $17.676 Astroterra and Jolt contributed $17.676M less $12.3M or $5.3M. $5.3M is 30.4% of $17.676.

Now could you tell me What Lightpoint's FSO sales were for the same period?


optics5 12/4/2012 | 8:05:02 PM
re: Cisco, Corning Invest in LightPointe You are absoultely right. Since FSO is relatively new to carriers, the winner will be the one who can provide a solution that is not confusing.

AirFiber had have a lot of hype but they have not deployed anything as yet. Their marketing team is almost gone. ANd they have a ATM mesh system( carrier hates that) Terabeam also have had alot of hype with Dan Hesse leaving ATT wireless to join Terabeam. Still the same problem-point to multipoint through windows-and no clients.

Optical Acess is a compnay that sells switches and is tryting to market their IP based mesh. Yet another silly idea by a MRV compnay. Look at Zaffire.

Now LightPointe has hit the Jackpot with Cisco and Corning. Infact they will be under pressure to start getting clients. Honestly, LightPointe because of this announcement has emerged as a WINNER.
Stop Sniffing Me! 12/4/2012 | 8:05:08 PM
re: Cisco, Corning Invest in LightPointe I understand it now - the guys who own metro optical (Cisco, Nortel) are pairing off with freespace optical companies (Cisco with Lightpointe, Nortel with AirFiber.)

Clearly a technology whose time has come. Most of the IXC's are planning to implement freespace in expensive metro builds, or rings that can't be closed, ones that have stranded buildings, etc. Also brings in revenue much earlier to turn up rings that otherwise would have to wait for months of fiber-laying.

Are Ciena, ONI, LuxN, etc sleeping? They need an interest in FSO also.
optics5 12/4/2012 | 8:05:12 PM
re: Cisco, Corning Invest in LightPointe Tex,
My salute to you for putting such a clear explaination on why Optical Acess is not an FSO company but a swit ching compnay led by Guy Avidan who was the CEO of Nbase.

I agree with you that the companies invest in companies because of what they are and what they can become on the future. Of all the FSO start-ups such as fSona and optical crossing, LightPointe came out as the winner because it is already shipping products and do not have any fancy power-point slides. In this market to get $ from Cisco is an achievment and will open doors to others FSO vendors as well.

It will be interesting to see what AirFiber will do to its so called ATM based mesh. I have heard that many of their people have left. Also, see what LightPointe will be doing with its cash.
tex 12/4/2012 | 8:05:15 PM
re: Cisco, Corning Invest in LightPointe Jolt and AstroTerra are only Optical Access because they accepted shares in MRV's combined company "Optical Access" under the assumption the company would soon have a public offering. Optical Access, as many companies, have retracted their S-1 filing and assumably have no intention of re-filing until the market improves. Some analyst should ask the former owners of Jolt and Optical Access if they would do it the same way again. Probably not.

To answer the question of whether or not Optical Access is an FSO company, just read the S-1 and look at how much revenue was generated as a result of Nbase/Xyplex switch/router sales. Over 80% consistently over the last three years. Only 20% was the result of free space sales.

Optical Access IS a switching/routing company, cleverly disgused as an FSO company. If the bulk of the revenue comes from switching, the bulk of the resources will go to switching. Sure, they are migrating to offer a complete solution including FSO, but beware of what is under the disguise. All of those Jolt and AstroTerra installations, in a relative sense, were simple campus and LAN installations, not the kind of equipment carriers and ISP's would consider implementing.

Put it another way. If GE sold a jet engine to Boeing in 1967, would they today call it an "installation"? Certainly it was a sale then, and probably the best the company had to offer AT THAT TIME. But would Boeing install the same engine today?

I assume Corning and Cisco invested in LightPointe becuase of what the company IS and WILL BECOME, not becuase of what it ONCE WAS. Yes, experience matters, but LightPointe has been around just as long. In addition, take a look at some of the other press they have about 2.5 gig, all optical patents, etc. and I think you will see their investment logic.
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