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Source Photonics Files for IPO

Phil Harvey
12/26/2007

Source Photonics, the MRV Communications Inc. (Nasdaq: MRVC) subsidiary, today filed for a $130 million initial public offering. MRV has been discussing the plan to take Source public since January. (See MRV Buys Fiberxon, Preps IPO.)

Source, an optical components maker, didn't specify how many shares it was selling, nor did it state a specific price per share in its S-1 filing with the SEC. The $130 million figure was tossed out "for the purpose of calculating the registration fee..."

Coincidentally, MRV shelled out just over $130 million to buy components maker Fiberxon, which it then merged with LuminentOIC Inc. to create Source in the first place. (See MRV to Acquire Fiberxon.)

The Fiberxon buy rubbed MRV investors the wrong way at first because Fiberxon was in the middle of dealing with accusations of financial and accounting irregularities. Fiberxon's own auditors once noted that a review of the company's financials "called into question the commitment of Fiberxon's management to maintain reliable financial reporting systems... " (See MRV Sags on Fiberxon Buy and MRV Closes Books on Fiberxon.)

Source's S-1 filing notes that the Fiberxon accounting mess led to the departure of the company's CEO and VP of finance prior to the company's acquisition by MRV. Parent company MRV says it has the problem under control but noted that it can't "provide absolute assurance" that all of Fiberxon's accounting troubles were directly caused by the behavior of those executives that left.

Still, Source is in an enviable position in the fiber-to-the-home components market. Source supplies components and subsystems that now power at least two very high-profile, fiber-fed access networks, AT&T's U-verse and Verizon's FiOS. As a direct supplier to Alcatel-Lucent, Motorola, Tellabs, UTStarcom, ZTE, and others, Source boasts in its financial filings that it alone has delivered "approximately 90% of all ONT [optical network terminal] transceivers shipped through September 30, 2007" in North America.

But with that enviable position also comes some extreme customer concentration. Tellabs accounted for 49 percent of Source's revenues during 2006.

For that year ended December 31, 2006, Source says it booked $92.2 million in revenues. Make that $140.3 million, pro forma, if you add in Fiberxon's revenues, too.

As of September 30, 2007, the company says it had 1,486 employees and full-time contractors worldwide.

— Phil Harvey, Managing Editor, Light Reading

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lr_fanny
lr_fanny
12/5/2012 | 3:48:17 PM
re: Source Photonics Files for IPO
I hear that OpVista has laid some folks off. Anyone hear anything?
JaguarsPaw
JaguarsPaw
12/5/2012 | 2:56:55 PM
re: Source Photonics Files for IPO
A large portion of the TLAB revs come from VZ Fios B-PON triplexer sales.
vlui
vlui
12/5/2012 | 2:56:55 PM
re: Source Photonics Files for IPO
the article says 49% of Sources' revenue comes from Tellabs. If Tellabs get pulled out of AT&T's FTTx plan, do we smell a stinky IPO coming?
DCITDave
DCITDave
12/5/2012 | 2:56:55 PM
re: Source Photonics Files for IPO
... Fibie?

http://www.lightreading.com/do...
JaguarsPaw
JaguarsPaw
12/5/2012 | 2:56:54 PM
re: Source Photonics Files for IPO
I think Teknovus or Broadlight would be good acquisition targets.
^Eagle^
^Eagle^
12/5/2012 | 2:56:54 PM
re: Source Photonics Files for IPO
if the general economic environment holds (who knows what the new year will bring in world events and in the USA economy?) some guesses would be:

-Santur
-Neophotonics
-EGtran (merged Ezcon & Gtran)
-CyOptics
-at least one of the "ROADM" companies that is still standing alone will probably try to go if they are not bought out first.
-Stratalight
-perhaps one of the China module players: WTD or Wuzi ZTE ?
-Opvista
-Optellian (seems much less likely, but possible)

Also Huawei could decide to finally go IPO. That would be quite big were it to happen as it would be the only really large systems OEM IPO on world markets and would give an interesting view into what investors think a counter to ALU or Cisco might be worth on the world financial stage. I know they have been carefully preparing for such for several years. Don't know where they will eventually decide to go public, perhaps the HK exchange.

counter questions:

who will go belly up on '08?

who will be acquired?

sailboat

usd100
usd100
12/5/2012 | 2:56:54 PM
re: Source Photonics Files for IPO
so how about other IPO aspirations in 2008:Santur, NeoPhotonics...
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