Optical components

Multiplex Scores Another $105M

Multiplex Inc. has made good its promise of a hefty third round of funding. Tomorrow morning, the optical component startup will announce $105 million from a slew of high-profile investors. The sole placement agent was Credit Suisse First Boston Technology Group. The round brings Multiplex's total funding to $130 million since its March 1998 founding.

Light Reading first learned that Multiplex was seeking another big round in February (see Multiplex About to Secure $100M Round). Since then, the market for venture capital has withered to half its size (see VC Activity Plummets), which raises the question: What's so special about Multiplex that it can command such a high amount in such troubled times?

One answer is that Multiplex is among a handful of startups tackling the challenges of high-end, integrated, active optical components (ones that incorporate lasers) for 10-Gbit/s networks. And sources say that's an area where burgeoning demand is causing a shortage in supply.

"Vendors looking to build 10-gig Ethernet devices are finding they can't get the lasers," says Dale Murray, senior research analyst with ElectroniCast Corp..

With large OEMs, such as Nortel Networks Corp. (NYSE/Toronto: NT) glomming up 10-Gbit/s parts from big suppliers such as JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU), there's plenty of room for newcomers to make good, analysts say.

Multiplex has another thing in its favor. It's among a small group of companies specializing in EMLs (electroabsorptive modulated lasers), which are known for their ability to support integration of laser and external modulator in one chip.

"People originally questioned whether there would be sufficient performance in EMLs," Murray said. "Now, it looks as though they can meet the performance requirements." As a result, a new market has opened for these integrated lasers, which reduce the number of parts developers have to cope with. And the addition of 10-Gbit/s capabilities is an added boon.

For its part, Multiplex is anticipating the rush. It says it will use the new funds to continue expansion of manufacturing facilties. The company presently has two buildings covering 35,000 square feet in South Plainfield, N.J., and it's just bought a third building, with 226,000 square feet, in the same municipality. The new building will house the corporate headquarters and manufacturing operation.

Multiplex says it's hiring actively. So far it has just 275 employees, about half of whom are involved in manufacturing.

Are any IPOs in sight? Not yet, sources say. "We're focused on getting new customers," says a spokesperson. "I don't have any information on IPO plans right now."

-- Mary Jander, Senior Editor, Light Reading
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