Optical components

NeoPhotonics Sets IPO Terms

It's been nine months, so you'd be forgiven if you forgot that NeoPhotonics Corp. (NYSE: NPTN) had filed to go public. It's now looking like the IPO might actually happen.

The company's latest S-1 amendment, filed with the Securities and Exchange Commission (SEC) on Tuesday, is the first to cite details of the planned offering. Neophotonics plans to offer 7 million shares at $9 to $11 apiece.

Why this matters
Optical IPOs are rare, and while Inphi Corp. did well going public last year, it's got a franchise in PC memory-interface chips. NeoPhotonics will test investors' taste for a more purely optical company.

It's an exit that's been long in coming for NeoPhotonics (founded in 1996, changed its name in 2002, went through bankruptcy in 2003). An acquisition doesn't seem likely, given the company's size and diversity.

Interestingly, NeoPhotonics might finally (and suddenly) be getting profitable. For the first nine months of 2010, the company reported net income of $2.8 million on revenue of $132.9 million.

For more
Signs of financial life in the optical components world:

— Craig Matsumoto, West Coast Editor, Light Reading

Pete Baldwin 12/5/2012 | 5:15:06 PM
re: NeoPhotonics Sets IPO Terms

The length of time this has taken... that can't be a good sign, can it?

Separately:  The new S-1 says Neo underwent a 1-for-25 reverse split in November, and the payout for those "Series X" shares got simplified - they'll be swapped for 400 Neo common shares each.

deauxfaux 12/5/2012 | 5:15:05 PM
re: NeoPhotonics Sets IPO Terms

When you look at the total amount of invested capital in this thing....and the time it has taken to get to IPO with the classic 50% VC IRR expectation for the return on capital....Neo is a disaster. Bandel at Oak has been writing checks seemingly forever and IMO, throwing bad money after good into an enterprise that cannot remotely claim to deliver POSITIVE, risk adjusted (well, probably not even risk adjusted)  shareholder value.

As an old compadre of mine once said "you can't make chicken salad out of chicken **** no matter how much mayo you've got in the jar"


BigBro 12/5/2012 | 5:15:03 PM
re: NeoPhotonics Sets IPO Terms

> The length of time this has taken... that can't be a good sign, can it?

Probably not.

BTW, Force10 filed their S-1 on March 2, 2010, and not much has been heard from them since...

Stevery 12/5/2012 | 5:15:03 PM
re: NeoPhotonics Sets IPO Terms

Anyone have a tally for total money in? 

pandapanda 12/5/2012 | 5:15:00 PM
re: NeoPhotonics Sets IPO Terms

Quite a few tech manufacturing IPOs have been in the pipeline since spring last year because the macro economic conditions were bad and the markets were not ready for them.

Pete Baldwin 12/5/2012 | 5:14:59 PM
re: NeoPhotonics Sets IPO Terms

Very true (and the reminder, below, about Force10 is appropos) ...

But there are so many question marks over this one. Neo raised more than $40M just before filing. Its got a deep dependence on Huawei that seems to just keep getting deeper (full 2010 results would be very revealing on that count). Just doesn't seem like an easy sell.

BigBro 12/5/2012 | 5:14:52 PM
re: NeoPhotonics Sets IPO Terms

Sure, but everyone knew (or should have known) at the time that it was going to be a difficult environment for new offerings. The world had just been through the deepest recession since the Great Depression, after all.

The only reason to time your IPO in early 2010 was either you were confident that you'd have a blockbuster IPO, or you were desperate to raise cash.

Look at Force10's S-1, and their most recent "Series A" funding round (they reset the "round counter" when they merged with Turin -- the last "pure Force10" round was their $113m Series F in early 2007, which brought their total funding to $400m: http://gigaom.com/2007/02/05/f..., and their public statements about their profitability that they've made since then, and judge for yourself which boat Force10 is in...

^Eagle^ 12/5/2012 | 5:14:09 PM
re: NeoPhotonics Sets IPO Terms

Looks like we will see how the Neophotonics IPO goes fairly soon.  the financial news services all talk about an IPO early this week.  Perhaps Tuesday.

it will be interesting.


^Eagle^ 12/5/2012 | 5:14:08 PM
re: NeoPhotonics Sets IPO Terms

latest wire service reports say Neo will go on Wednesday.  Earlier speculation was that it would be Tuesday.


Pete Baldwin 12/5/2012 | 5:13:58 PM
re: NeoPhotonics Sets IPO Terms

IPO launched this morning at $11 per share (high end of the range), selling 7.5 million shares (0.5M more than originally proposed).  Shares are up to $13.50 after about an hour of trading (3.38M shares traded).

I think there are still a lot of question marks around the company, but for the moment, they're profitable, and they've found a following.

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