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Optical/IP

Light Reading Exposes Privates

Once again, Light Reading's editors have reduced all the blood, sweat, tears, and cash that our industry pours into its startups into a nifty little file we affectionately call Light Reading's Top Ten Private Companies. The List's mission, as always, is simple: Survey the telecom private company landscape and try to handicap which companies are headed for liquidity. Light Reading uses an assortment of popular metrics such as funding, revenues, customer connections, and reseller deals to help figure out which companies are most likely to either go public or get bought.

In addition to the usual facts and figures, though, Light Reading also picks companies using our network of well-placed sources, our access to top-notch industry research from Heavy Reading, some subjective assessments -- such as, "Does the CEO's breath smell?" -- and a few cases of contemplative refreshment.

It's that combination of unique industry insight and world-weary gut feeling that has made the Top Ten Private Companies List a hotbed of debate in years past. Occasionally we find unloved gems that the top-tier VC world appears to shun (see WaveSmith Networks), and yet other times we fall under the spell of the Silicon Valley glamour boys who turn out to be duds (see... well, that list is too long to publish here). The current List is a more eclectic mix than usual, with one gigantic Asian equipment conglomerate, a sleepy phone switch vendor, and a big money, big hype, transport company.

The companies on the List this time around are (in alphabetical order): You'll have to actually read the List to find out the order, why we made each pick, and what companies came close. But if the very List itself stirs you, feel free to let us have it on the boards below or in the following poll:

As with everything published on Light Reading, the feedback loop is ongoing. If you have a comment on the companies picked, the ones missed, or the list in general, you may also send a note to [email protected].

— Phil Harvey, News Editor, Light Reading

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captain kennedy 12/5/2012 | 1:48:02 AM
re: Light Reading Exposes Privates Peter,

You have got to be kidding!
coreghost 12/5/2012 | 1:48:01 AM
re: Light Reading Exposes Privates
It might be a double-standard but for the fact
that China is no sort of democracy,
Huawei has a long history of doing business
with the PLA and doing the PLA's dirtywork
in dual use sales overseas. Maybe some believe
that Huawei's interest in "growth markets" like
Iraq and Afghanistan was just part of their
great business strategy. But anyone with any
sense knows those deals were done for reasons
that have nothing to do with business.

I'm not aware of nortel being founded by army
money and I'm not aware of nortel working with
the army to sell equipment into countries under
international sanctions.

Nortel is a bad example. There are american
examples in terms of the large number of companies
that do outsourcing for the US military, NSA,
CIA and national labs with a revolving door
between them and the pentagon. But the american
examples don't really change what Huawei is.
whyiswhy 12/5/2012 | 1:48:00 AM
re: Light Reading Exposes Privates Peter:

Who really thinks Owens will clean up the mess at NT? He is an insider, and an obvious target of shareholder lawsuits. He needs a defense strategy, period. Just asking/speculating, I have no factual basis.

Huawei does what they have to to survive, and then some. How much do you think they charged the NSA for the back door keys to those "bad" systems? Just asking/speculating, I have no factual basis.

-Why
PO 12/5/2012 | 1:47:56 AM
re: Light Reading Exposes Privates Nortel's new CEO, William Owens, was second in command of the US military at one stage and folk think that's a good thing.

Huawei's founder, Ren Zhengfei, was in the Chinese military at one stage, and folk think that's a bad thing.

Double standards?


Hmm. LR editors don't seem to differentiate between the US military and the Chinese military as training grounds for business, and they're hypersensitive about disclosure of their own relationships with companies on the list.

Is it any wonder that nobody seems to take the list seriously?
Curious George 12/5/2012 | 1:47:55 AM
re: Light Reading Exposes Privates Let's see, a capitalization of $280M to date against a total '04 (RHK estimate):
- DWDM TxRx module market of $420M in '04
- Sonet/SDH TxRx module market of $708M
-combined Ethernet/Fiber channel market of $780M

How does this make sense much less make the list of top private companies? Maybe because only a private company could push a business case like this through their board and still keep their jobs...

Seriously, what was the selection criteria that placed them on the list?



PO 12/5/2012 | 1:47:52 AM
re: Light Reading Exposes Privates The average MacDonalds franchise costs $45K, and grosses $1.3M per year.

This $45K is just the franchise fee. Then you've gotta outfit the place ($500K - 1M ?), and you're paying 16.5 percent of gross revenues in various fees (according to the cited article). Even assuming "free" finanacing, cheap rent, and labor costs under control, the ROI isn't quite as sweet as the first blush might suggest.

Don't believe everything you read - especially from CNN. There are better resources for evaluating franchisors.
whyiswhy 12/5/2012 | 1:47:52 AM
re: Light Reading Exposes Privates The Infinera device is basically an EDFA replacement. Let's do the math on quarterly reports and some ROM assumptions.

JDSU did $160M in their latest quarterly report, and they own about 60% of the optical components market. Of that, let's say 30% was in EDFAs. High I admit, but let's go with it. That makes the total EDFA (or its replacement) market about $360M this year.

Presuming they solve the cost/yield and reliability problems, so they can make a gross profit, and they can price to get a fraction of the market.

Tidbit: The average MacDonalds franchise costs $45K, and grosses $1.3M per year. If the $280M was invested in a group of MickyDee franchises, they could expect to gross $197M per year.

http://money.cnn.com/2004/04/2...

Pretty sure no one in optics can do that, not even Cisco (though they will come close), let alone start-ups.

-Why
pearlh 12/5/2012 | 1:47:50 AM
re: Light Reading Exposes Privates The military world is closer than you think.
This link will take you to a job offer of
TelecordiaGÇÖs (maker of OSMINE) parent
company SAIC.
http://jobs.saic.com/ajobbext3...
stephenpcooke 12/5/2012 | 1:47:48 AM
re: Light Reading Exposes Privates The Infinera device is basically an EDFA replacement.

I don't think that their device can replace ANY EDFAs. On new routes it may be used instead of EDFAs but this is also questionable. The architecture is yield-averse and the wavelength selection is fixed, not promising EDFA replacement characteristics. As I have said before its most likely path of success is short reach switch interfaces, not regens.
coreghost 12/5/2012 | 1:47:47 AM
re: Light Reading Exposes Privates Your right about SAIC. Its one of a number of
companies thats an extension of the US government.
It was even started by people who came out of
the national labs. Telcordia came from Bellcore
and Bellcore was part of ATT when it was a giant
monster attached to the government.
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