IPOs Lose Their Luster

Tougher market conditions in 2001 will force a growing number of startups to abandon hopes of staging IPOs and look to be acquired instead, according to Scott Clavenna, president of PointEast Research LLC and director of research at Light Reading.

One of the main reasons for this is that carriers are becoming wary of buying equipment from startups, says Clavenna, in a Light Reading report on the Top 10 Trends of 2001, published today.

Clavenna says that a shakeout is inevitable this year, because there are so many startups and because it’s gotten much tougher for service providers to raise money to continue their expansion plans.

However, Clavenna doubts the shakeout will be particularly severe. “A few high profile bankruptcies of CLECs [competitive local exchange carriers] have got folk over-anxious,” he says. The market for optical networking equipment will remain “quite strong” for another five years, he adds.

“The emphasis is shifting from grabbing market share to making a proper return on investment,” says Clavenna. This is reflected in the Top 10 Trends report, which identifies the technologies that promise to dominate 2001. The report also identifies the companies to watch in each field.

-- Peter Heywood, international editor, Light Reading http://www.lightreading.com

Peter Heywood 12/4/2012 | 9:02:43 PM
re: IPOs Lose Their Luster Which of today's startups are most likely to be acquired in the foreseeable future....and why?
lanman 12/4/2012 | 9:02:42 PM
re: IPOs Lose Their Luster Likely Targets for acquisition:

Riverstone Networks - Could fill a large hole for a certain large european based telecom equipment maker that does not have in house routing/switching expertise. WIth their ability to support ATM/SONET/IP over glass, this would complement this companies SONET/SDH and ATM products.

MetroOptix - Could provide a nice edge box for aggregation to optical backbones provided by large canadian company. With ATM/FR/and Sonet support, this would give this large company a real weapon against Cerent/Ciena-Cyras.

Nishan Systems - If they can deliver on their promise of running Storage on IP systems, this could get snapped up by large storage provider that missed out on Fibre Channel run-up. Very interesting story. Look at who is on the board of directors.

spindoc_lr 12/4/2012 | 9:02:41 PM
re: IPOs Lose Their Luster Vivace Networks seems to one that can fill a huge hole for Nortel. With Alteon and Shasta they fill a hole on the IP services space for L4 stuff and SMS function. What about multiservice access to MPLS? I do not see a better company than Vivace to do that. Vivace seem to have a great ASIC and S/W engineering team and has a great deal of customer momentum behind it

Other optical player might be interested in Vivace.
Sycamore, Corvis.

Some European player might even benefit from the Vivace product. Unisphere, Alcatel and Marconi to name a few.
gladlady 12/4/2012 | 9:02:40 PM
re: IPOs Lose Their Luster would caspian be a good acquisition for anyone?
mahadeva 12/4/2012 | 9:02:34 PM
re: IPOs Lose Their Luster If we really knew what Caspian did, it might make sense to talk about it being a target for an acquisition. Until they announce what their products are, there are only two things that might be worth acquiring: their PR dept and Dr. Lawrence Roberts. With regard to the former, definitely slogans like "It will all become clear ..." must be worth megabucks to the right company. One wonders if their last round of financing was needed simply to pay off the PR firm responsible for this slogan. Now, Dr. Roberts definitely has value as a figurehead. Not many companies can claim they have one of the four fathers of the Internet on their payroll. Humor aside, there must be something happening behind the closed doors at Caspian. Apparently, Lucent tried to buy them cheap well-over a year ago, but Roberts declined. With their latest $85 million round, they should be good-to-go for at least another 10 months, by which time we will know more about their "secret." Whether they will be an acquistion target then? On their own website, they make it pretty clear that, not only do they want to play in the big game, they think they can be the only play in town. "Caspian Networks does not intend to be acquired. We plan to grow our organization to become a top-tier equipment provider ourselves." The year 2001 may indeed go down in the continuing annals of the Internet as the year "it all became clear."
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