$100M added to the balance sheet must trigger some serious bonuses for at least some people at the top.
If they are not hiring, not acquiring and they are not taking on the Carrier's work then they must be about to do a new development with the current personnel and they believe that they need $100M to get it started?
It must be some good story they told the VC guys to get them on board.
Nobody has leaked the "Story"??
I wish my company could get $100M up front to start a new development with the current staff.
The $50M of loan would be poorly used if it is used to fund day to day operations. If it were me, I would be having a nice little bankroll because RUS like contracts have some interesting payment clauses. It might be nice to have a cushion to build product without drawing down on my last cash reserves.
The other $50M should be troubling. There is a LOT of money into Calix. I haven't added it all up, but it might be somewhere over $400M. At this point, one would hope that the company wouldn't need more money to keep the doors open. But if you read the messaging, that is what I read. If they were cash flow positive, the load would have been useful. But here they are diluting things again. With no definite plans for the money, but you don't get money for no reason at all.
I would say the stimulus is really a problem for Calix and Occam. We should be able to track the progress through Occam, as they are public and focused on markets where there should be spending based on stimulus. The problem goes something like this: Is there a big uptick? If so, then what happens when the stimulus goes away (have people pre-bought gear that they were eventually going to buy anyway)? If not, where did it all go?
I think Calix is going to use the broadband stimulus as a hook by which to go public. This funding round, I bet, is nothing more than a late mezzanine funding round to dress up the balance sheet and give them a little bit more capital to build working capital balances. RUS can be capital intensive. The VCs will be getting this money back, and more, within the next nine months.
My guess is that if Calix is profitable it is not by much. Their cash balances are probably low and, with the almost certainty of a pickup in business, it presented an opportunity to raise funds.
"I would say the stimulus is really a problem for Calix and Occam."
I would not even compare the 2 in this context.
OCNW has virtually ZERO debt, whereas Calix?
As you said: "If they were cash flow positive, the load would have been useful..."
Well, I think we can agree that OCNW is pretty darned close to cash flow positive/eps+, so borrowing or expanding a credit line is good for them
Calix? More a sign of posturing or other financial issues, IMHO.
Monies like this are key to being able to digest a good chunk of the stimulus(enhanced working capital/credit line)...not something to be squandered on propping up a balance sheet.
OCNW should be fine, and is well poised to borrow bigtime as needed to expand.
The stimulus will be based around GPON in the Tier 3s. That is about a 0% market share for Occam. The Tier 2s are not doing stimulus.
Note - Losing Cash aka Cash Flow Negative is not a sustainable business model. It is quite possible to be negative EPS and Cash Flow positive. Being Cash Flow Negative means that you will have to raise more money. Calix did it, Occam will have to as well as they have several times in the past.
Occam is a cute little company with nowhere to go.
The one with ~$43M cash (just a little...right?), $32K debt (agree), and 20% Tier 3/2 marketshare...
losing money? So is Calix, right?
Why else would they need to gorge themselves at a trough of $100M?
-cuz they're doing so *well*?
Many companies are cash flow neutral to slightly negative today, I think OCNW, though, has one of the best positions leading into the Stim, and the financial flexibility to get the most from it, and one of the lowest sharecounts so that any success can be lucratively shared with it's shareholder base.
Smells like bonus season at Calix!!
$100M added to the balance sheet must trigger some serious bonuses for at least some people at the top.
If they are not hiring, not acquiring and they are not taking on the Carrier's work then they must be about to do a new development with the current personnel and they believe that they need $100M to get it started?
It must be some good story they told the VC guys to get them on board.
Nobody has leaked the "Story"??
I wish my company could get $100M up front to start a new development with the current staff.
jmunn