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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

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
swhymax 12/5/2012 | 4:02:30 AM
re: Sources: Force10's Prepping Its IPO I agree. They have solid leadership and decent engineering. A big weakness is the marketing head.
startup_shutup 12/5/2012 | 4:02:30 AM
re: Sources: Force10's Prepping Its IPO >> I am confused as to what you mean by a sweat shop?

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...
literight 12/5/2012 | 4:02:30 AM
re: Sources: Force10's Prepping Its IPO There is between $300-400m vc money in. When they pop, valuation should be between say extr and fdry or between $0.5-2b so what will be interesting if the employees get to make any money at all. Unless there have been washout rounds already.

In terms of tech, they are solid as a L2 switch and a "good enough router" sans mpls-- rumour has it they will have it soon.

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).

http://www.networkworld.com/ne...
tymax 12/5/2012 | 4:02:31 AM
re: Sources: Force10's Prepping Its IPO Force 10 has one of the strongest cultures going. I think everyone remembers what they once were and applies across the board. I am confused as to what you mean by a sweat shop? Makes no sense. Is it boredom to post messages and not back anything up?
DCITDave 12/5/2012 | 4:02:36 AM
re: Sources: Force10's Prepping Its IPO re: "F10 was/is a political sweatshop"

What does that mean?

That it's not a good place to work? Or something more?
DCITDave 12/5/2012 | 4:02:37 AM
re: Sources: Force10's Prepping Its IPO re: "We appreciate the service, but we also need respection from lightreading.com."

I'm all about giving you respection.

Lots of respection.

ph
russ4br 12/5/2012 | 4:02:41 AM
re: Sources: Force10's Prepping Its IPO Mr. Gates bought DOS, he did not write it. As for windows, MSFT management stole the idea hook line and sinker from AAPL

Thanks for pointing this out. You're correct.

Nonetheless, Bill Gates has the merits of (i) outsmarting IBM lawyers on the DOS/PC contract terms, (ii) developing DOS into a viable operating system for more than a decade, and successfully migrating the DOS-base to Windows.

Bill Gates didn't write every single line of DOS code enhancements, but he definitively contributed to a number of ideas on architecture/design. The actual coding were done by the thousands of talented programmers that he brought onboard, and that he made millionaires on the process of Microsoft's success.

As for windows, MSFT management stole the idea hook line and sinker from AAPL, who stole it from Xerox Parc.

The same kudos go to Steve Jobs ... and all the product transitioning/strategy from the early AppleII to MacOS X, etc.

And for other good ideas that came from Xerox/PARC ... Ethernet and 3Com, anyone?

My comments were about the unrelenting bitterness of companies that can't compete, and resort to poking fun along the lines of "look how crappy Windows/IOS are" jokes ...

Makes one think about the comments made by General Motors about "if we build cars the way Microsoft build Windows" ... ha ha ha

Probably now Bill Gates could say ... "if we run our market/product strategies the way GM management run their company" ... ;)

-russ
materialgirl 12/5/2012 | 4:02:43 AM
re: Sources: Force10's Prepping Its IPO Dear Russ4br,
Mr. Gates bought DOS, he did not write it. As for windows, MSFT management stole the idea hook line and sinker from AAPL, who stole it from Xerox Parc.

Mr. Gates knows how to extort, and how to lie (OS2 is the future!!), but I would say that as for quality software, forget it. Linux does better with no official R&D department at all.
russ4br 12/5/2012 | 4:02:47 AM
re: Sources: Force10's Prepping Its IPO "Are we sure Bill Gates does not write the IOS code? "

oh yeah, sure ... the guy is a complete idiot! ... ha, ha, ha ...

never mind he start programming in mainframes when he was a teenager ... never mind DOS or Windows ... by far the standard for personal computer operating systems in our world ... never mind being founding Microsoft and being the wealthiest man in the world for what? ... the umpeteenth year in a row ... this Bill Gates fella is really an idiot.

"I cant get IOS stable enough to really test it!!!"

ha, ha, ha ... how funny ... I imagine they don't let you get anywhere close to the routers in the production network, do they?

If you really want to bring to your company alternatives to Microsoft/Cisco ... you'll need to focus on what the new proposed vendors can bring in terms of positives (at a device, system, network, business) level.

-russ

startup_shutup 12/5/2012 | 4:02:47 AM
re: Sources: Force10's Prepping Its IPO >> F10 was/is a political sweatshop...

I like this kind of TRUTH coming out ... keep them coming ... thanks
tymax 12/5/2012 | 4:02:48 AM
re: Sources: Force10's Prepping Its IPO I am amazed how many people voice opinions with no data to back anything up. Tell me more than three other start-ups in the infrastructure space that are better than force 10??
OpticOm 12/5/2012 | 4:02:50 AM
re: Sources: Force10's Prepping Its IPO Neither do I.
F10 was/is a political sweatshop...
startup_shutup 12/5/2012 | 4:02:50 AM
re: Sources: Force10's Prepping Its IPO I for one WILL NOT buy stocks in force10 IPO....
FiberWorld05 12/5/2012 | 4:02:52 AM
re: Sources: Force10's Prepping Its IPO LOL...a guy with CCIE in his name talking about latency!

The only reason I wont bash Cisco for their latency problems is because I cant get IOS stable enough to really test it!!!

Are we sure Bill Gates does not write the IOS code? Bringing me to my favorite saying...a network with Cisco and Windows has more crashes than a NASCAR race :P

FiberWorld05
zher 12/5/2012 | 4:02:55 AM
re: Sources: Force10's Prepping Its IPO "If you think that little of our reporting ability, then don't read the site."

This doesn't look professional at all, lightreading provides the forum for networking guys to discuss here, if you don't want to listen to the different voice, then just please simply close the discuss function in any of your article.

Again, ppl here are for the credit of lightreading.com, not for yours or any single reporter's.

We appreciate the service, but we also need respection from lightreading.com.

Period.
Alpine 12/5/2012 | 4:03:12 AM
re: Sources: Force10's Prepping Its IPO Actually not only is it entirely normal to not hype in front of an ipo but it would be illegal. The sec imposes a quiet period on companies leading up to and post filing an s-1. While they are permitted to continue normal marketing and advertising efforts they are not permitted to do anything special as it relates to the IPO.
DCITDave 12/5/2012 | 4:03:16 AM
re: Sources: Force10's Prepping Its IPO re: "I will say it is also quite suspicious that Force 10 would be prepping an S-1 but not willing to comment on that fact. I can't imagine why a company prepping an IPO would want to do anything other than make noise, especially to LR."

In 1999, I'd agree. But these days, it really depends on the company. Some are okay with talking. Others just don't want to rock the boat.
DCITDave 12/5/2012 | 4:03:17 AM
re: Sources: Force10's Prepping Its IPO re: "The risk seems to be high by going public - everyone will see the numbers, their competition will take advantage by focussing on the level of debt and subsequent risk and they will need to continue to ramp revenues with a limited market."

Have you read Vonage's S-1?

Seriously, I think Force10 will play up the fact that they sell to several markets -- not just carriers, or enterprises -- and that'll help some.

Beyond that, there's nothing more to say until we actually see the filing and see what kind of shape the company is in.
DCITDave 12/5/2012 | 4:03:17 AM
re: Sources: Force10's Prepping Its IPO re: "Now, do you have any comment on the content of my message or do you want to continue discussing this?"

What were we talking about anyway?

ph
Stevery 12/5/2012 | 4:03:17 AM
re: Sources: Force10's Prepping Its IPO I'm only saying that the folks who helped on this were in a position to know that the company is prepping an IPO.

If those folks are in the financial community, are they with investment banks?

If so, they would also profit from an acquisition/merger. (They take a % of the total deal in either case.)

I will say it is also quite suspicious that Force 10 would be prepping an S-1 but not willing to comment on that fact. I can't imagine why a company prepping an IPO would want to do anything other than make noise, especially to LR.

Regardless, thanks for the info about the sources. I think it put the story in better context.
metroman 12/5/2012 | 4:03:18 AM
re: Sources: Force10's Prepping Its IPO re: "touch a nerve did I"

Yes, you've shattered my confidence. I can't go on. Why can't everyone everywhere like me all the time?
-----------------------------------------------

Don't kid yourself that I was proud of putting one over on you. That really is not the case. I am not here to gloat or waste my time, I am here to discuss and learn. Perhaps you should do the same.

Now, do you have any comment on the content of my message or do you want to continue discussing this?

Metroman
DCITDave 12/5/2012 | 4:03:18 AM
re: Sources: Force10's Prepping Its IPO re: "touch a nerve did I"

Yes, you've shattered my confidence. I can't go on. Why can't everyone everywhere like me all the time?

ph
DCITDave 12/5/2012 | 4:03:19 AM
re: Sources: Force10's Prepping Its IPO er: "How did you verify that the two primary sources have no financial interest in seeing the company aquired?"

I'm only saying that the folks who helped on this were in a position to know that the company is prepping an IPO. And that they weren't Force10 employees.

ph
metroman 12/5/2012 | 4:03:21 AM
re: Sources: Force10's Prepping Its IPO "If you think that little of our reporting ability, then don't read the site."

........touch a nerve did I?

I was simply offering a scenario for discussion. If you don't like having your articles discussed in an open forum, don't write for a site that asks for comment.

Metroman
FlaccidCCIE 12/5/2012 | 4:03:22 AM
re: Sources: Force10's Prepping Its IPO But the latency! And I have a budget that Force10 will never see. This brings us to the only logical conclusion, in that their ability to IPO solely rests on me.

FlaccidCCIE
DCITDave 12/5/2012 | 4:03:22 AM
re: Sources: Force10's Prepping Its IPO re: "It would not suprise me if this story was a plant to try and motivate a quick sale of the company."

If you think that little of our reporting ability, then don't read the site.

The two primary sources on this were in the financial community and not folks who worked for the company, so I feel pretty good about the info.

ph
Stevery 12/5/2012 | 4:03:22 AM
re: Sources: Force10's Prepping Its IPO The two primary sources on this were in the financial community

Now you have me curious: How did you verify that the two primary sources have no financial interest in seeing the company aquired?

I gotta admit, the market doesn't seem to be exactly salivating for an IPO like Force 10. (However, my info may well be lacking, in which case thanks for the article.)
metroman 12/5/2012 | 4:03:23 AM
re: Sources: Force10's Prepping Its IPO It would not suprise me if this story was a plant to try and motivate a quick sale of the company.

$60m revenues are not enough to sustain the level of funding that the company has on board, despite this number being credible.

Anyone with their wallet open (and an some market knowledge) will know that F10 are not a carrier ethernet player, rather they are in the grid computing/server clustering game. This has much lower exposure and probably a more limited client space even if some deals are substantial. (CERN is a good example)

The risk seems to be high by going public - everyone will see the numbers, their competition will take advantage by focussing on the level of debt and subsequent risk and they will need to continue to ramp revenues with a limited market.

I would be looking for a quick exit and suggesting an IPO might just make interested parties show their hand. It would be an easier aquisition if it could be done privately.

Metroman
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