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Optical IPOs: Opnext Is Next

Craig Matsumoto
10/30/2006

Opnext Inc. (Nasdaq: OPXT) looks to be the next optical components vendor to go public, as the company filed its S-1 form with the Securities and Exchange Commission (SEC) on Friday.

The filing arrived just on the heels of the Optium Corp. (Nasdaq: OPTM) IPO, which launched on Thursday, Oct. 26. (See Optium Files for $100M IPO.)

Opnext isn't yet specifying how many shares would be sold or what price range it's shooting for. It intends to list on Nasdaq using the symbol "OPXT."

The IPO's lead underwriter is Goldman, Sachs & Co., accompanied by CIBC World Markets , Cowen and Co. , Jefferies & Co. Inc. , and JPMorgan Partners .

A six-year-old spinoff of Hitachi Ltd. (NYSE: HIT; Paris: PHA), Opnext sells a variety of transceiver modules, with much of its focus on 10-Gbit/s parts. Its portfolio includes parts for the 300-pin, Xenpak, XPAK, X2, and XFP multisource agreements. The company also sells lasers and subassemblies, and, in its carefree youth, it was among the many firms declaring plans for OC768 (40 Gbit/s) transmission. (See OpNext, Velocium Team on OC768 .)

Most industry folks have been expecting some optical IPOs this year. Opnext and Optium were considered the favorites, but other names have crept into the discussion. Tunable laser startup Santur Corp. , for example, hinted about IPO possibilities at OFC/NFOEC in March. (See OFC: Optics & IPOs.)

NeoPhotonics Corp. (NYSE: NPTN), which has grown substantially through acquisitions, is another IPO possibility. Officials there make the usual noises about considering the idea and wanting to shore up the business first; meanwhile, investment bankers have caught the scent. "There's certainly no shortage of people offering their services," Christoph Pfistner, the company's director of FTTx business, told Light Reading in July.

Once Optium had filed, analysts and industry sources suggested the success of that IPO (or lack of same) would dictate what the other players might do. Undaunted by a patent-infringement suit from Emcore Corp. (Nasdaq: EMKR) and JDSU (Nasdaq: JDSU; Toronto: JDU), Optium climbed as high as $22.45 after going public at $17.50 on Oct. 26; the stock was trading at $20.07 as of early afternoon today. (See JDSU, Emcore Sue Optium and Optium IPO Rolls On.)

Opnext hasn't yet listed how many shares it plans to sell. The company has 150 million shares of Class A common stock outstanding, 70 percent of which are owned by Hitachi, with the other 30 percent in the hands of entities or funds associated with Clarity Partners LP , Opnext's primary U.S. backer.

CEO Harry Bosco is the largest holder of Class B shares, with 3.3 million, or 38 percent. Hitachi and Clarity hold fully vested options to pick up 3 million Class B shares each, according to the S-1.

The optical sector has enjoyed some good news this year, but Opnext is still losing money. For its first quarter, which ended June 30, Opnext reported net losses of $3.5 million, 2 cents per share, on revenues of $40.4 million, compared with losses of $11.5 million, 7 cents per share, on revenues of $31.4 million for the same quarter in 2005.

For the fiscal year ending March 31, Opnext reported losses of $30.5 million, or 20 cents per share, on revenues of $151.7 million. For fiscal 2005, Opnext lost $32.7 million, or 21 cents per share, on revenues of $138.4 million.

Opnext spun out of the fiber optics division of Hitachi in 2000. Former Lucent Technologies Inc. (NYSE: LU) group president Bosco, who had recently joined Clarity, was named Opnext's CEO in January 2001. (See Hitachi Plans Component Spinoff, OpNext Names Management Team, and Harry Bosco.)

The telecom bubble's deflation would start shortly after that, but Opnext wasn't hurting for cash. In 2001, the company picked up a $321 million investment from Clarity and Japanese firm Marubeni Group . (See OpNext Gets $321M Investment.)

— Craig Matsumoto, Senior Editor, Light Reading

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Stevery
Stevery
12/5/2012 | 3:36:31 AM
re: Optical IPOs: Opnext Is Next

The same Bosco that took ONG to it's great success in 2000?
The same Harry Bosco that thought that many wavelengths of 2.5G was a suitable answer to Nortel's 10G?

Hahahahahahahahahahaha.

They want to go public? And they're not even profitable?

Hahahahahahahahahahaha. Stop it, I can't take anymore.

Now I remember why I keep reading this site, you guys can really make me laugh.
deauxfaux
deauxfaux
12/5/2012 | 3:36:26 AM
re: Optical IPOs: Opnext Is Next
Well...if it is any consolation to their investors, the Hitachi guys call all of the real shots in this business. The research and operations teams work out of Japan.

But I am sure that the Japanese teams take their daily direction from the NJ crew

BWAHAHAHAHAHAHA
Pete Baldwin
Pete Baldwin
12/5/2012 | 3:36:24 AM
re: Optical IPOs: Opnext Is Next
Ah, no faith in Harry Bosco, eh? Well, you can't say this was a surprise -- Opnext was assumed to be IPO'ing all along, right?

So, who looks closer to profitability: Opnext or Optium .... it looks like Optium could have been there in fiscal 2006 were it not for the Engana purchase.

But the more fun question is: Who's next? Or, should there *be* a "next" yet?
deauxfaux
deauxfaux
12/5/2012 | 3:36:20 AM
re: Optical IPOs: Opnext Is Next
"Ah, no faith in Harry Bosco, eh?"

Actually, I have complete faith in Harry's consistency. I fully expected that he would give himself a fat salary, and he did ($400k base from the S-1). I also had faith that he would surround himself with yes-men from LU, and he did. But most of all, I had faith that he would fail to create a profitable company, which he did.

I expect that the P&L will look better this quarter with a little help from Hitachi. All of the investors know that it is time to get out while the gettin's good

deauxfaux
deauxfaux
12/5/2012 | 3:36:19 AM
re: Optical IPOs: Opnext Is Next
Sorry...Infinera's next
^Eagle^
^Eagle^
12/5/2012 | 3:36:10 AM
re: Optical IPOs: Opnext Is Next
not neccessarily in order:

Gtran / Ezconn
Infinera
Santur
NeoPhotonics
Tropic
Meriton

a few others I am also tracking.

sailboat
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