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Optical/IP

Force10 Takes $40M, Talks IPO

Force10 Networks Inc. has raised another $40 million in venture funding, which investors believe will be enough to take it to IPO, Light Reading has learned.

The funding, which closed during the summer, was intended as extra margin while Force10 undergoes the IPO process, says Dick Kramlich, a Force10 board member and a partner at New Enterprise Associates (NEA). (See the recent Light Reading interview: Dick Kramlich, Founder & General Partner, NEA.)

"Force10 did do a pre-public financing of $40 million just to make sure we're operating on equity capital all the way through here," Kramlich says. The idea, he notes, was "to give us plenty of latitude so that as we go into the six-month process of selecting bankers and everything, we have our finances in good order."

Having ensconced itself in the burgeoning 10-Gbit/s Ethernet market, Force10 Networks ranked No. 9 on this summer's rendition of Light Reading's Top Ten Private Companies. This means a quick Force10 IPO could ruin Light Reading's streak of having the No. 10 company be the one on the list to undergo a liquidity event. (Apparently, Atrica Inc. needs to pick up the pace.)

Force10 fell from a No. 2 standing in 2004 due to exit challenges coming to such a late-stage startup (see Force10: Where's the Exit? ). Having now raised $324 million, the company can't fit through every exit door. Specifically, any potential acquirer -- (Nasdaq: JNPR), for example, which was repeatedly rumored to be interested -- would likely be scared off by a price tag that would certainly exceed $500 million.

But Force10 doesn't appear to be dead weight, either. Its revenues have rocketed in a short time, reaching an expected $60 million this year, according to Kramlich (see Force10 Revs Revenues). And it may not be a coincidence that the company is revving up for an IPO just as one of its marquee customers, Google (Nasdaq: GOOG), appears to be ramping up its own networking investment in WiFi, new data centers, and optical networks (see Google's Free-Time Secure WiFi and Google's Own Private Internet).

— Craig Matsumoto, Senior Editor, Light Reading

Pete Baldwin 12/5/2012 | 3:00:55 AM
re: Force10 Takes $40M, Talks IPO OK, let's run some numbers. What do you think Force10 could get in an IPO?

And think of the over/under on what it would take to acquire Force10 now. It's got to be approaching $1 billion, yes? (That's including emotional/human-nature factors, not just the numbers.)
Stevery 12/5/2012 | 3:00:54 AM
re: Force10 Takes $40M, Talks IPO [revenue] reaching an expected $60 million this year

$60M x 3 = $180M

Once you throw in the stupdity factor:
$360M

It will raise, say $100M in the IPO. Final value:
$460M

And that's generous. The world doesn't need another company like this in the market.
sgamble 12/5/2012 | 3:00:51 AM
re: Force10 Takes $40M, Talks IPO No market doesn't but Juniper does ;)
light-headed 12/5/2012 | 3:00:48 AM
re: Force10 Takes $40M, Talks IPO What are they worth? Certainly less than Foundry, Extreme, 3com, Riverstone, etc...

so not very much according to the market...

ironccie 12/5/2012 | 3:00:46 AM
re: Force10 Takes $40M, Talks IPO Craig,

Can I start the bidding at 7 greedy venture capitalist companies who don't give a damn about anything but money no matter what the cost is to the consumer? I will throw in 4 crappy switches.

IronCCIE
L2guy 12/5/2012 | 2:59:53 AM
re: Force10 Takes $40M, Talks IPO You can't IPO if there's no demand. Who would be dumb enough to buy stocks from a company that is barely floating on borrowed money? Like we need another L2 vendor!
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