Optical/IP Networks

Zhone Files for IPO

Zhone Technologies Inc. filed for an initial public offering with the Securities and Exchange Commission today. The company is looking to raise $345 million through its offering, adding this to the $500 million it has already raised through VC funding and leveraged buyout money.

Zhone has developed a hardware and software architecture to consolidate multiple functions into one device, specifically focusing on the metropolitan area network (see Zhone Details Product Strategy). It competes against products from companies like Cisco Systems Inc. (Nasdaq: CSCO), Lucent Technologies Inc. (NYSE: LU), Nortel Networks Corp. (NYSE/Toronto: NT), and Redback Networks Inc. (Nasdaq: RBAK).

The company had no revenue for 1999 listed in the S-1 filed with the SEC, but it reports $60.5 million for the nine months ending September 30. Losses in 1999 were $30 million and ballooned to over $127 million in the last nine months. The company has been quickly burning through its cash, with only $124 million left from the $500 million raised, according to the S-1.

The lead underwriter for the offering is Credit Suisse First Boston, with Lehman Brothers, UBS Warburg, Thomas Weisel Partners, and U.S. Bancorp Piper Jaffray as co-underwriters. Pricing details have not yet been set.

-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com

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