PicoChip Bags $20M, Plans IPO
The funding news for this femtocell component pioneer is like a shot of adrenaline for the fledgling home base station industry, which has flagged this year because operators have not deployed the devices in the volumes that were expected.
Despite commercial commitments and launches from the likes of AT&T Inc. (NYSE: T), Sprint Corp. (NYSE: S), Verizon Wireless , Vodafone Group plc (NYSE: VOD), and even China Unicom Ltd. (NYSE: CHU), the number of femtocell units shipped remains low.
ABI Research , in fact, just cut its femto shipment forecast by more than half for 2009. The research firm estimates that just 350,000 femtos will be shipped by the end of this year, down from its previous estimate (April 2009) of 790,000 units.
But picoChip downplays the significance of the smaller-than-expected size of the femto market, claiming that this market scenario was expected.
"We're not particularly surprised that things are taking longer compared to the more optimistic targets from the beginning of this year," says picoChip CEO Nigel Toon, adding that the market is running about six months behind expectations. "It's in line with what we thought was going to happen."
Toon says picoChip will ship close to 300,000 units in 2009, and that next year the company will ship 10 times that amount -- around 3 million. (See PicoChip Unveils Low-Cost Femto Chip and PicoChip Unveils LTE Femto Chipset.)
The femto component maker's products are used in high-profile deployments, including AT&T's and Vodafone's femtocell access points supplied by Cisco Systems Inc. (Nasdaq: CSCO) (which uses an ip.access Ltd. femto) and Alcatel-Lucent (NYSE: ALU), respectively. (See AT&T on Track for Femto Launch, Brits Get Femtos From July 1 , and Who Makes What: Femtocells.)
picoChip, which employs 150 people (including 50 in China), expects full-year 2009 revenues to be about $20 million, and expects to be at a breakeven point in early 2010, according to Toon. (See Startup Targets Femtocells for China and picoChip Unveils TD-SCDMA Femto.)
Most of picoChip's revenues -- about 70 percent -- are derived from its WiMax base station components in the picoArray product line. The remaining 30 percent of sales comes from its picoXcell product family of chipsets and software for femtocells.
Next year, Toon expects to reverse that revenue mix, with 70 percent of revenues coming from femtocells and 30 percent of revenues coming from WiMax.
The latest $20 million funding round comes from existing investors Atlas Venture , Highland Capital Partners , Pond Venture Partners Ltd. , Scottish Equity Partners , and Rothschild , as well as strategic investors AT&T, Intel Capital , and Samsung Corp.
Toon is also preparing the company for an IPO some time in 2011. "We're an interesting, attractive company with revenues," says Toon. "Our goal [is to] focus on that IPO target."
In terms of product development, picoChip also announced today it has worked with Continuous Computing Corp. to round out its femtocell offering. The vendor now offers a "complete" femto solution, which includes not only the picoXcell silicon but also the reference design with the integrated Trillium protocol stack from Continuous. New software features include automated interference management and self-organizing network (SON) capabilities. (See Sniffer Femtos, Continuous, Picochip Work LTE, and Continuous & picoChip Partner.)
â€” Michelle Donegan, European Editor, Unstrung