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Optical components

Santur Raises $26.5M, Talks IPO

After closing a fourth, and rather secretive, round of funding, tunable laser vendor Santur Corp. is considering its options for going public.

Santur raised around $25 million early in the summer, CEO Paul Meissner tells Light Reading. News of the round first broke on Thomson Financial 's Private Equity Hub site, which pegged the amount at $26.5 million.

The round wasn't announced because Santur's new investors don't want to be seen in public with the company -- or something like that. "We didn't publicize it much because we've been asked not to talk about who's participating," Meissner says.

It's another sign that venture money is pouring back into optical components. Last week, passive components maker Gemfire Corp. announced a surprisingly sizable round. (See Gemfire Lights Up $37M.)

Santur's C round closed in 2005. The company has now raised about $95 million in its six-year lifetime. Its less shy investors include Menlo Ventures , Sequoia Capital , and Thomas Weisel Venture Partners . (See Santur Raises $16.6M and Santur Tunes In $10M.)

Santur has reached the breakeven point, so the funding wasn't needed for day-to-day operations, states Meissner. Instead, the company now has cash in the bank should it need growth funds.

The company owns a semiconductor fab and handles its own assembly and testing, rather than outsourcing those operations to Asia. That means any expansion would require some cash.

The new round also means Santur doesn't need to rush into an IPO to raise growth funds.

"An IPO is on the horizon for us. We haven't set a date yet. I don't want to be forced to go [to the public market] because of a need of capital," Meissner says.

Santur has been on the IPO radar since early 2006, when then-CEO Richard Craig dropped strong hints at OFC/NFOEC. Thus, unlike Gemfire, Santur can't be put on the list of companies we didn't know still existed. (See OFC: Optics & IPOs and ECOC Roll Call.)

Santur isn't saying what its revenues are, but based on various hints since last year, the annual figure is somewhere in the $60 million to $70 million range.

Santur sells tunable lasers that, obviously, go into tunable transponder modules, and it's going to stay that way. "Our whole long-term positioning is as a device company," Meissner says. "If you start looking at what's happening up the food chain, unless you go up to the system level, the margins are eroding pretty quickly."

Notable vendors such as JDSU (Nasdaq: JDSU; Toronto: JDU) and Optium Corp. (Nasdaq: OPTM) have pursued the opposite strategy, figuring modules had a better future than plain components. Some, such as Opnext Inc. (Nasdaq: OPXT), sell both lasers and modules.

That doesn't necessarily mean Santur's plan is wrong. "You can go either way. Look at CyOptics Inc. and Eudyna Devices Inc. -- they're not module companies," says Daryl Inniss, an analyst with Ovum RHK Inc.

What's more challenging about Santur's model is the manufacturing plant it owns. "If you have a fab, you have to keep it running at some level where you can cover your fixed costs," Inniss says. — Craig Matsumoto, West Coast Editor, Light Reading

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