Optical/IP Networks

Investors Find Route into Corvis

Quite a few people would give their eye teeth to own shares Corvis Corp. http://www.corvis.com, an optical networking startup viewed by some financial analysts as potentially worth $20 billion if it was to go to an IPO.

Very few people realize that they don't have to give up their eye teeth to achieve this goal. There is a way of buying the equivalent of Corvis stock right now, albeit via a similar back-door to the one described in yesterday's story about Nanovation Technologies Inc http://www.nanovation.com.

In Corvis's case, a company called Roctest Ltd that's quoted on the Toronto stock exchange (ticker symbol RTT) owns 105,232 Series D shares in Corvis shares, each of which is convertible into 12 shares of common stock. This represents 4.56 percent of the startup's outstanding stock. As a result, buying shares in Roctest gives investors an indirect stake in Corvis, in the same way that buying shares in Stamford International Inc. gives investors a pre-IPO stake in Nanovation (see Nanovation Prepares the Ground for an IPO).

The link between Rocktest and Corvis became more widely known last February, and drove Roctest's shareprice up from around $5.50 to $10. However, one Roctest investor who contacted Light Reading after yesterday's story on Nanovation reckons there's plenty of scope for a further several fold increase in Roctest stock (see Feedback, page 2, for details).

Much of this speculation is based on the belief that Corvis's founder and CEO, David Huber, is determined to stick it out to an IPO. He's rumoured to have turned down an offer of $10 billion for his company from Cisco Systems, Inc. http://www.cisco.com.

Corvis is developing a package of switching, transmission and management systems to deliver all-optical long haul backbones. Its gear is being trialed by a handful of carriers. Huber himself co-founded Ciena Corp. http://www.ciena.com but left soon after its IPO to set up Corvis. See The Top 10 Movers and Shakers in Optical Networking)

by Peter Heywood, International Editor, Light Reading http://www.lightreading.com

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