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Optical/IP

Sources: Force10's Prepping Its IPO

Force10 Networks Inc. is just a few days away from filing its S-1 paperwork with the SEC and declaring to the world that it wants to be a public company, sources familiar with the situation say.

What's not yet clear is how big an offering Force10 will make, but sources say the company expects to file papers in less than a month and the lead underwriter is expected to be Morgan Stanley .

Force10 was called for this story but declined to comment.

The Ethernet switching firm is hoping to ride the carrier Ethernet buzz all the way to the bank, say Wall Street sources. The company has revenues somewhere north of $60 million and has been rumored to be on the block in recent years. Sources close to the company say an IPO looks to be a more likely exit, given the acquisition price it would need to fetch to pay dividends on the $284 million in venture funding it has raised in its lifetime. (See Force10 Takes $40M, Talks IPO and LR Names Top Ten Privates.)

Sources expect that the company will tout its wins at more cutting-edge communications companies –- like Google (Nasdaq: GOOG) and Vonage Holdings Corp. (NYSE: VG) –- as proof that it can offer superior technology at a competitive cost, versus established router and switch vendors like Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (NYSE: JNPR).

"Google is using Force10 Ethernet switches at its core and Juniper routers at the edge," says one financial analyst who watches the Ethernet switching and routing market. "We definitely expect Force10 to play up the fact that they beat Juniper in the core." (See Force10 Gets Dense.)

Others expect the company to play up the claim that its big switches offer 90 percent of Juniper's core routing functionality at about 15 percent of the cost.

And it doesn't hurt that Force10 was picked by Light Reading last year as a Leading Lights winner in the category of Top M&A or IPO Candidate, Private Company. (See LR Names 2005 Leading Lights Winners.)

Analysts agree the carrier Ethernet market is experiencing a surge that could help Force10 make its pitch to investors.

"Chief amongst the drivers for broadband investment is the advent of IPTV services, a potential portfolio of IP-based, TV-centric services which could include broadcast TV, video-on-demand, HDTV, networked PVR, online gaming, music download, video telephony, and home security services," according to Infonetics Research Inc. 's November 2005 report on the Ethernet switch market.

Likewise, Heavy Reading projects that global carrier Ethernet switching and routing (CESR) revenues will break the $1 billion mark in 2006. The firm cites more network activity related to enterprise Ethernet services and residential triple-play, IPTV, and video-on-demand services as the catalysts for the CESR market. And, by 2008, the CESR market will hit revenues of $2.2 billion, Heavy Reading says.

Of course, carrier-related business is only about one third of Force10's sales. The rest of its business is split evenly between research networks, data centers, and enterprise customers. And competition is tough all around as Force10 squares off against Cisco, Juniper, Extreme Networks Inc. (Nasdaq: EXTR), Nortel Networks Ltd. , Foundry Networks Inc. (Nasdaq: FDRY), Huawei Technologies Co. Ltd. , and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), to name a few.

— Phil Harvey, News Editor, Light Reading

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whyiswhy 12/5/2012 | 4:01:53 AM
re: Sources: Force10's Prepping Its IPO Funny, most companies REALLY ready to do an IPO generally try to keep it very low key, not all over the public boards.

This has the smell of another private round-tout: "Look, we can talk about an IPO".

That sort of stuff is so, err, '98-'00.

Kestrel comes to mind.

-Why
startup_shutup 12/5/2012 | 4:01:58 AM
re: Sources: Force10's Prepping Its IPO >> Wow! That's some change of hearth! Living off the very industry you seemed so fond of trashing on these boards, besides trashing start ups, of course.

I figured out GǣSCAM OF THE CENTURYGǥ:

1. Government prints money

2. Excess money is injected inthe marketplace as easy credit

3. People who can see through this scheme rush to obtain credit

4. After getting credit approval they buy asset which is most likely to appreciate

5. Frequent asset transaction generates profit for asset sellers and middlemen

6. Savers loose by NOT choosing to participate in this money-printing money-looting game

7. Foolish workers choose to work in startups to chase dreams only to be shattered later.
sigint 12/5/2012 | 4:02:08 AM
re: Sources: Force10's Prepping Its IPO shutup:
Also forgot to mention that I have income by steady extraction of home equity (no need to struggle in a startup for income, I earn income by "sleeping in house"). Please read the following article to understand how I do it:
____________________________________

Wow! That's some change of hearth! Living off the very industry you seemed so fond of trashing on these boards, besides trashing start ups, of course.

startup_shutup 12/5/2012 | 4:02:08 AM
re: Sources: Force10's Prepping Its IPO >> I moved to better companies and watch startup struggle from side lines

Also forgot to mention that I have income by steady extraction of home equity (no need to struggle in a startup for income, I earn income by "sleeping in house"). Please read the following article to understand how I do it:

Home Sweet Cash Cow
How our houses are financing our lives
By Carol Lloyd, Special to SF Gate
Friday, March 10, 2006
http://sfgate.com/cgi-bin/arti...
startup_shutup 12/5/2012 | 4:02:10 AM
re: Sources: Force10's Prepping Its IPO >> It is apparent that you do not have that spirit and many people do not. So, the startup thing is not for you.

Startup in present form (where employees have NO CONTROL on how the end game is played out) is not for me. I moved to better companies and watch startup struggle from side lines ....
ironccie 12/5/2012 | 4:02:12 AM
re: Sources: Force10's Prepping Its IPO Hi Folks,

Honestly, I have made my money and moved on. I am now pursuing a much greater venture in my life and have decided not to hate or control what anyone else will do. I have quite a large family thank you all for helping them when I'm gone.

Suggest you do the same. You are wasting your time on this board if you are not doing research. I am currently researching my next opportunity that may or may not involve the use of existing services from Force20 and I don't want them to think I hate them anymore. Let bye-gones be bye-gones. There is opportunity for all the substandard companies. Cisco is a good company. Foundry is a good company. These were my favorites in my 36 year networking career and now I have retired. I wish you all the luck and to those of you who want to know how it ended, the construction contract landed the biggest deal in my career of selling networking services. Just follow the bouncing ball and location is everything.

Good luck Force10. Good luck Foundry! Good luck Cisco!

IronCCIE


sigint 12/5/2012 | 4:02:14 AM
re: Sources: Force10's Prepping Its IPO literight:
On another note, anyone used this what do y'll think? With a PCI bus, should be able to deliver some decent interfaces for free (or cheap).
______________________________________________

literight,

thanks for the link. interesting stuff. i wonder how this is going to pan out once pci is outdated and pcie takes over - which is imminent if Intel have their way.

Of course, the same software ought to run, but new hardware would be required. and i would think some amount of platform sw effort too.

but nice link anyway. i do wish the open source community all the luck. i'm myself a big fan.

mugwhump 12/5/2012 | 4:02:18 AM
re: Sources: Force10's Prepping Its IPO Brookseven -

Well put! Startups require a different mindset. Obviously "startup-shutup" has a bone to pick. Wish he would "shutup"!

I wish Force10 folks all the best.
startup_shutup 12/5/2012 | 4:02:24 AM
re: Sources: Force10's Prepping Its IPO B7,

Which part of the following is not TRUE?

Come experience it first hand by working 70+ hours per week and weekends with NO CONTROL over how the end game will pan out. Come work for crappy benefits. Come work in cramped conditions. Come work for selfish management and founders. Come work for uncool ideas while driking startup kool-aid...

Actually the list could be MUCH LONGER like:

* Come work for a company whose name nobody knows in your social circle

* Come work for a company like a monkey with no dignity

It is quite well known that Silly Con valley is overrated ... startup funding should go to ASIA ....
paolo.franzoi 12/5/2012 | 4:02:24 AM
re: Sources: Force10's Prepping Its IPO
Your work experience depends on you. I know people who work 70 hours a week at East Coast mature companies. How about Lucent's management? Little of your crap has anything to do with the fact that the company is a startup or where it is located. It means there are companies that treat employees badly. It happens everywhere and in companies in all sizes.

Your personal mistake is misunderstanding what the attitude required to make a startup is. 90% of startups fail utterly. The other 10% don't necessarily succeed wildly. But somebody has an idea and they convince others that it might work. It is a risk and can require the same gumption that Lewis and Clark had. It is apparent that you do not have that spirit and many people do not. So, the startup thing is not for you. It does not mean that it is not for anybody.

Unfortunately, you seem to think that you are able to tell people what is right for them. You do so without regard to facts. This is a form of spewing nonsense to the point of being stupid.

If you do end up at a startup where you see the management is horrible to work for or the idea is stupid, then leave. Why did you go to work there in the first place? You wanted something for nothing. So, take a look in the mirror sometime and admit that the problem is right there looking at you.

seven
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