Laurel: Startup Holdout?

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changeisgood 12/5/2012 | 12:01:47 AM

re: Laurel: Startup Holdout? >>Laurel is banging away on customer accounts and looks to have an important multiservice edge routing product.

>>Its only announced customer is Level 3 Communications Inc.

>>So who's left? What about Fujitsu, NEC, Nokia, Nortel ,Siemens for a start?

what a list of losers (incl L3).

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light-headed 12/5/2012 | 12:01:47 AM

re: Laurel: Startup Holdout? You guys dont seem to do much analysis. Nokia invested in redback and is the biggest re-seller of the smartedge router. no reason to buy laurel.

No one will pay that much money for a box that is built from off the shelf hw (no custom ASICs) no matter how good the SW.

That said the Laurel product is very good from what i have seen. They need a smaller product to go along with the current 1/2 rack solution.

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Honda_Elise 12/5/2012 | 12:01:46 AM

re: Laurel: Startup Holdout?
The Allegro Networks box, which is somewhat
similar to the Laurel product, has custom ASICs
and works. Sure, only a few people are still
employed there, but hey, no associated employee
overhead costs!

>You guys dont seem to do much analysis. Nokia >invested in redback and is the biggest re-seller >of the smartedge router. no reason to buy laurel.
>
>No one will pay that much money for a box that >is built from off the shelf hw (no custom ASICs) >no matter how good the SW.
>
>That said the Laurel product is very good from >what i have seen. They need a smaller product to >go along with the current 1/2 rack solution.

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xos 12/5/2012 | 12:01:46 AM

re: Laurel: Startup Holdout? Redback is a more likely candidate for Nokia. Rumour has it that Redback is in the process of restructuring its debt - doing a debt for equity swap, with some help from outside investors. This should be done by July - August timeframe. After this is done, Redback, will in all probability be bought by Nokia.

my 2 cents

xos

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lmo 12/5/2012 | 12:01:45 AM

re: Laurel: Startup Holdout? I heard a rumour their VP of Sales has left/is leaving the company?? Can anyone confirm? Seems odd if a buyout is in the works...

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lightmaster 12/5/2012 | 12:01:44 AM

re: Laurel: Startup Holdout? IMO,

If the VP of sales is out looking for work, it could mean that he anticipates that his position will be eliminated after a merger and he is trying to do his homework early. It is seldom that a VP of sales survives an aquisition.

If he is leaving now, that would in deed be strange if an aquisition is in the works.

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reoptic 12/5/2012 | 12:01:44 AM

re: Laurel: Startup Holdout? 250M for a company with one customer with a small deployment at lousy margins? Somebody been drinking too much boom cool aid. The are worth 10% of that at best given normal valuations. However, there are certainly equipment companies wacky enough to pay such outrageous valuations, as recent transactions have demonstrated. Guess they are counting on continued industry dementia.

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lightmaster 12/5/2012 | 12:01:43 AM

re: Laurel: Startup Holdout? reoptic,

I know an example of one startup thumbing it's nose at an offer over a billion just prior to the bubble bursting, then having to settle for a small fraction of that amount later. Cool aide is cheap and abundant.

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Kevin Mitchell 12/5/2012 | 12:01:42 AM

re: Laurel: Startup Holdout? I believe that Laurel is attractive to entrenched telecom equipment vendors for the following reasons:

1) The edge and overall network convergence are two areas of focus for carrier spending.

2) The only edge start-up left and their router sales are probably equal, if not better than, the revenue from Redback's SE router. While, Laurel has one ANNOUNCED customer, there are probably more.

3) There are needs from telecom vendors: Nortel does not do much with their Juniper relationship and can't create an IP product and Siemens and Ericsson are both marginalized by the Junicent partnership and joint development. As for Fujitsu and NEC, I doubt it, but Fujitsu does have a service and support contract with Laurel now.

As for the $250M+ price for a start-up with revenues probably around $4-5M per quarter, that seems a little silly, but there probably will be some competition for that last start-up in the edge.

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skeptic 12/5/2012 | 12:01:41 AM

re: Laurel: Startup Holdout? As for the $250M+ price for a start-up with revenues probably around $4-5M per quarter, that seems a little silly, but there probably will be some competition for that last start-up in the edge.
-----------
The closer Laurel gets to break-even on revenues,
the higher the price will go. I think its still
the case that most of the M&A companies are more
concerned about the impact on quarterly earnings
a money-losing startup can have than the cash
(or stock) purchase price.

But the other thing that Laurel has to keep in
mind is that if the unthinkable happens and
the IPO window opens again, they could do very
well if their balance sheet continues to
improve.

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