Multiplex About to Secure $100M Round
Clearly, this shows that the venture world hasn’t been scared off by Nortel Networks Corp.’s (NYSE/Toronto: NT) crash last week, which sent component suppliers like JDS Uniphase Inc. (Nasdaq: JDSU) into a nosedive.
“I think we’re going to see a lot of the innovation coming from new startups,” says Joseph Wolf, an analyst with UBS Warburg. “They’re in a good position to focus their resources on solving specific problems much more easily than a bigger company that has to manage a larger business. For those that succeed, there is a lot of opportunity out there.”
Multiplex, which was officially formed back in 1998, is focused on three separate product areas: 980 nanometer pump lasers, 10-Gbit/s EML (electro-absorption modulated lasers), and 10-Gbit/s photo receivers. This puts them up against big suppliers like JDSU, Corning Inc. (NYSE: GLW), and Agere.
Right now JDSU, through its acquisition of SDL Inc. (Nasdaq: SDLI), dominates the 980nm pump laser market, but the lasers are in short supply. Larger customers, like Nortel, Lucent Technologies Inc. (NYSE: LU), and Alcatel SA (NYSE: ALA: Paris: CGEP:PA), are scrambling to get their hands on enough parts to fill orders for system vendors. Because these larger customers are able to pull their weight and negotiate preferred contracts, tier-two players like Ericsson AB (Nasdaq: ERICY), Oplink Communications (Nasdaq: OPLK), and Ditech Communications Corp. (Nasdaq: DITC; Frankfurt: BDTH) are often left in the cold.
The constrained market is good news for Multiplex, which plans to target these smaller players.
“The tier-two players are good targets for us,” says Dan Gay, director of sales and marketing for North America and Asia Pacific for Multiplex. “We offer greater product availability and we’re an independent supplier, so our customers don’t compete for product supply with any of our internal groups.”
But that isn’t the only reason that investors see promise in Multiplex. The company is also integrating features into its products, something that industry analysts say is a growing trend.
For example, Multiplex is the first vendor to offer a 10-Gbit/s receiver with a limiting amplifier, which provides digital output, built into the product, claims the company. This is important, because it simplifies assembly for customers. Essentially, if the limiting amplifier weren’t included, the customer would have to buy a separate 10-Gbit/s transceiver and attach it to a limiting amplifier on a separate board.
“I haven't seen anyone else do this," says Dale Murray, senior research analyst with Electronicast Corp., a market research firm. “It allows the customer to deal with a digital signal, which is much easier than dealing with an analog signal. Basically, it simplifies the whole circuit board integration process, and that is what customers are looking for these days.”
While Multiplex’s small size is a benefit, it also could be a downside. With a staff of only 210, 60 percent of whom are involved with production, it could be hard for the company to keep up with customer demand. But the company says that it has been able to leverage some automation techniques that should help it scale.
-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com