Is Google Fueling BTI's Growth?

While other telecom equipment vendors struggled in 2011, optical and Carrier Ethernet transport systems vendor BTI Systems Inc. claims to have had an exceptional year and has raised a fresh round of funding.

And Light Reading believes the vendor, which says it now has nearly 400 customers, may also have landed a significant new user during 2011 in the form of Google (Nasdaq: GOOG). More on that later.

Impressive growth rate
The vendor tells Light Reading it has increased its revenues at a compound annual growth rate (CAGR) of 35 percent during the past five years, with that growth reflecting "the momentum of the market and the network segments we participate in, as well as the customers we have been fortunate enough to grow with."

BTI declined to reveal its 2011 sales total, as many privately owned companies do. However, given that the vendor was on course for revenues of more than US$50 million in 2010 -- as stated in November 2009 -- it may not be unreasonable to suggest that, while the CAGR is an average over a five-year period, BTI's revenues for 2011 would be in the region of $70 million.

Indeed, industry sources suggest that figure is in line with general expectations and that year-on-year growth in 2012 may be even higher than 35 percent.

Further growth is certainly expected by the vendor's management team, with it planning to invest further to build its customer base and sales pipe even further. BTI, which says it is "focused on the opportunity in the metro network supporting the dramatic growth of high-bandwidth Internet video and content distribution," tells Light Reading it has generated operating profits in some (but not all) quarters in 2011 and has been pumping that back into further expansion and R&D.

It also now has an additional $23 million in funding from a new round lead by Bain Capital , which has been earmarked for expanding BTI's direct and channel sales development, marketing, product development and customer service. BTI has now raised around $80 million in venture backing.

To support that growth, the company has opened a new U.S. headquarters in Littleton, Mass. (just outside Boston), and hired new senior product management, engineering and marketing executives. (See BTI Gets $23M, Picks US HQ.)

That new facility includes a Center of Excellence that has a focus on "packet technology development," something that should cater to the needs of Google, which, it seems, has joined BTI's growing list of customers.

Talk of Google orders
Industry speculation suggests that Google has been deploying BTI's new Dynamic Optical Layer technology in its metro networks. That technology was launched officially by BTI in August 2011 and has featured in two officially announced deployments since then. (See Epsilon Makes Metro Move With BTI and BTI Transforms Iowa IOC.)

The exact scope of Google's business engagement with BTI is unclear, but it's understood that the Web services giant has committed significantly to the deployment of the vendor's ROADM-on-a-blade product that has enhanced path-centric provisioning capabilities. (See BTI Intros Dynamic Optical Layer.)

The vendor says it has "no information to share" regarding Google, while the Web services giant did not respond to requests for comment regarding its metro transport network technology deployments.

Stock answer from BTI
So what's next for BTI? Is the new round of funding the final push towards a possible stock market listing? Not yet, it seems, but maybe in the future.

In a statement emailed to Light Reading, the company noted that it is "not a startup seeking to reach the public markets in a compressed or unrealistic time frame. We know that we need to ensure quarter-to-quarter consistency to accompany the 35% compound annual growth rate we are seeing. ... We'll have multiple avenues available to take the company to the next level of growth, with the possibility of an IPO being among those."

BTI's optimism is like a breath of fresh air in the telecom technology market at present, as other companies react to negative pressures on their top and bottom lines during the past year. (See Tellabs to Restructure, Cut 530 Jobs NSN to Cut 2,900 Jobs in Germany, Juniper's Q4 Got Even Worse and Acme Packet Revises Forecast.)

— Ray Le Maistre, International Managing Editor, Light Reading

stuartb 12/5/2012 | 5:43:41 PM
re: Is Google Fueling BTI's Growth?

Google is a small percetage of BTI's revenues. Their growth is fueled by winning business with tier-3 customers based on price.

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