IPO Alert: Infinera Files Its S-1

Infinera Corp. (Nasdaq: INFN) filed its S-1 with the Securities and Exchange Commission (SEC) today, and no, it's not profitable yet.

But the filing itself is a landmark for the Silicon Valley superstartup that intends to change the way DWDM networks are built.

Infinera's IPO has been anticipated for about a year, and strong signs of an S-1 filing were cropping up in January. (See Is Infinera Ready for an IPO?)

The company, now with 605 employees, has raised $315 million since its inception in 2000 as Zepton Networks. Its most recent round, a whopping $110 million, came in July. (See Infinera Raises Another $110M.)

But Infinera has only started to get meaningful revenues. Its true sales have rocketed -- to $58.7 million in 2006, according to the S-1 -- but $44.3 million of that came in the quarter ended Dec. 31. Revenues for 2005 totaled just $4.1 million.

As for the losses, they're hard to ignore: $89.1 million, or $14.55 per share, for calendar 2006, and another $215 million during the four previous years, according to the S-1.

Table 1: Infinera in the Red
    2002   2003   2004   2005   2006 
Revenues ($M) 0 0 0.6 4.1 58.7
Net loss ($M) (34.1) (50.2) (66.5) (64.6) (89.1)
Net loss per share ($17.05) ($16.10) ($15.30) ($13.76) ($14.55)
Cash & equivalents ($M) 50 54.2 40 37.1 29.6
Source: Infinera Corp.; figures as of Dec. 31 of each year

Despite a burst of customer wins recently, Infinera got 60 percent of its 2006 revenues from Level 3 Communications Inc. (NYSE: LVLT), a deal announced in May 2005. That situation should pass eventually; Infinera's S-1 says the company has scored 25 customer wins as of Feb. 15. (See Infinera Reaches Level 3, XO Selects Infinera, and Infinera Muscles Into Interoute.)

Details such as the number of shares to be offered, or the price, haven't been penciled in yet. For the purposes of calculating a registration fee, the company's paperwork lists its "maximum proposed aggregate offering price" of $150 million.

Goldman Sachs & Co. is Infinera's lead underwriter, joined by Citigroup , JPMorgan Partners , Lehman Brothers , and Thomas Weisel Partners .

Aside from the numbers, the S-1 reveals a bit of Sarbanes-Oxley trouble, in the form of a "material weakness" in the way Infinera valued its inventory. The S-1 says the weakness has been corrected. Separately, and perhaps unrelated, Infinera swapped out its CFO in June, around the time it was presumed to be planning an IPO. (See Infinera's CFO Quits.)

Another interesting tidbit: The S-1 says Infinera got sued last year by Cheetah Omni LLC of Ann Arbor, Mich., over two patents -- Nos. 6,795,605 ("Micromechanical Optical Switch") and 7,142,347 ("Method and system for processing photonic systems using semiconductor devices").

Both patents are credited to Mohammed Islam, a professor at the University of Michigan whose research group has spun out startups including Xtera Communications Inc. (Nasdaq: XCOM)

Infinera's largest shareholders are Advanced Equities Inc. and Kleiner Perkins Caufield & Byers , the S-1 says. Each holds roughly 6.4 million shares, for a 9.3 percent stake. Mobius Venture Capital and RWI Ventures , respectively holding 7.8 and 5 percent, are the next largest shareholders.

The largest employee/director shareholder is chairman and CEO Jagdeep Singh, with 3.2 million shares, or 4.5 percent.

— Craig Matsumoto, West Coast Editor, Light Reading

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tmc1 12/5/2012 | 3:12:46 PM
re: IPO Alert: Infinera Files Its S-1 sailboat,

I agree and that is why I said that the SEC might want to talk to ninja. If he has friends/relatives at Infinera or works there they would really like him to shut up at this point.

I also don't believe that they have multiple un-announced wins at Tier 1 carriers. Maybe some trials at this point.

^Eagle^ 12/5/2012 | 3:12:48 PM
re: IPO Alert: Infinera Files Its S-1 interesting.

as someone who has 20yrs working with T1 carriers, for the "contractor" deployment teams to know about would imply a lot.

Before "contractor" teams would ever be let into this kind of change, LOTS of things have to happen at the carriers:

deep lab trials, first office trials, first live traffice field trials, product approval cycles by all parts of the carrier decision making team,.... and then training all the 1st level CO managers and CO technicians on the platform for OAM and configuration software. Transmission engineers / network planning staff would need the new platforms from Infinera put into their architechture planning and purchasing tools.

ONLY then would sub-contractors be called in... only after lots of links had already been deployed carrying live traffic on the platforms.

I would be VERY surprised if Infinera has made it this far with those carriers and not made associated press releases! If it were true, then all that noise about the cash flow from Infinera would go away and the IPO would probably double or triple in value.

Therefore, if they were this far along (as per ninja.. all those carriers will be using Infinera to carry traffice by Q4 and press releases will happen accordingly) why would they not divulge this as part of the IPO.

So, my conclusions: one of the below:

a) ninja has no clue
b) ninja has deep insider connections and knows things that he should not be divulging
c) ninja has deep insider connections at certain carriers... and NO they would not be the "sub-contractor" installation crews.. those guys would be the last to know.. he or she would need to have very deep contacts inside carrier high level decision makers and if that is so.. then ninja is at a minimum violating their trust.. or perphaps breaking an NDA.

I am not sure which of the above is true.

I don't see Nortel, ALU, Fujitsu, Ciena, Huawei, Marconi/Ericsson, or Siemens or Tellabs abandoning their dwdm platforms! And I am sure those companies have deeper ties to the major carriers than ninja or infinera.

Therefore, it is clear to me something doesn't add up.

It is obvious Infinera needs the cash. The other stuff sure seems like hype to me.


ahwnn 12/5/2012 | 3:12:49 PM
re: IPO Alert: Infinera Files Its S-1 I am just wondering if there are any highly probably grants that have been issued to those outside if Infinera, who have not invested in the company as individuals. I was asked to look as discounting revenues in an analysis based on potential weaknesses with existing clients.

Thanks for the help
whyiswhy 12/5/2012 | 3:12:51 PM
re: IPO Alert: Infinera Files Its S-1 Ahwnn

Yes, asked and answered. 5% of the common is the figure, I believe. See earlier messages.

Just like the good old days.

voipexpat 12/5/2012 | 3:12:55 PM
re: IPO Alert: Infinera Files Its S-1 Ninja Turtle, I would double check your sources info....
ahwnn 12/5/2012 | 3:12:55 PM
re: IPO Alert: Infinera Files Its S-1 Are there any rumors out there on specific individuals(if anyone), that work for carriers who may be testing the gear, that Infinera has given stock options to? I am just curious if we are back to the Sycamore and Corvis days, grease the CTO and get an order.
ninjaturtle 12/5/2012 | 3:12:56 PM
re: IPO Alert: Infinera Files Its S-1 BTW...If you read the S-1 they claim 25 customers and identify ~ 10. They are not obligated to reveal unannounced customers in their S-1.
ninjaturtle 12/5/2012 | 3:12:56 PM
re: IPO Alert: Infinera Files Its S-1 yes my sources are the carriers. Friends that work in deployment teams that see and know what is going into the network builds over the next 6-12 months. Telco is a small world in the deployment area where contractors are used to balance out the workload spikes during installs.
tmc1 12/5/2012 | 3:12:56 PM
re: IPO Alert: Infinera Files Its S-1 ninjaturtle,

If you or your reliable sources are working for Infinera then this is big trouble as you are either pumping the stock falsely or revealing information that is not available to the general public. Either way the SEC would be very interested to talk to you and your "sources".

If you are just making this up or you are getting ALL of your info from the carriers themselves then it is probably legal but questionable.

whyiswhy 12/5/2012 | 3:12:57 PM
re: IPO Alert: Infinera Files Its S-1 = trict, ninjaturtle...

Are those names Freudian or what?!


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