Transmode Ramps in 2007

European optical vendor Transmode Systems AB has reported revenue growth of 21 percent for 2007, and is ready for an IPO when (or if) the company’s board gives the green light.

The Swedish vendor, which cites the Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden), the U.K., and Germany as the strongest markets for its metro WDM products, increased its customer base of carriers, enterprises, and public institutions by about 30 percent to more than 200 by the end of last year, having landed a number of new deals in Western and Eastern Europe.(See Transmode Unveils Metro ROADM, Transmode Touts Irish Gig, Serbians Gear Up for Growth, Transmode Wins in Poland, and Transmode Wins Hungary.) CEO Karl Thedéen says growth was particularly strong in Germany, where Transmode doubled its sales in 2007, “taking market share from one of our larger competitors on their own turf.” The vendor’s main rivals are Ciena Corp. (NYSE: CIEN) and German vendor ADVA Optical Networking . (See ADVA Lowers Q4 Forecast.)

He adds that the growth in the customer base also means the vendor “is less dependent on our key customers -– we have diversified our customer base and markets,” and is seeing less and less business from enterprise customers, and more from carriers and cable operators.

As a result, revenues grew 21 percent to 459 million Swedish Kroner ($72.7 million), while order intake grew 33 percent to total SEK470 million ($74.4 million). Earnings before interest, tax, depreciation, and amortization (EBITDA) was SEK29.6 million ($4.7 million), from SEK1.5 million ($237,000) a year earlier.

Thedéen says he expects Transmode to grow faster than the market this year, at about 30 percent, and has some new products in the pipeline. The company is pushing further into eastern and southern Europe, using local sales partners, and is engaging in “advanced business development” in North America and Asia/Pacific, where Thedéen expects to see sales ramp up in 2009.

So does that mean the company is in good shape now to list its shares on the public markets? It’s been hinting at an IPO for about a year, and raised more money last March. (See Transmode Lands Another $12M.)

The CEO says the company is preparing to go public and is waiting for the green light from the board, but notes that the macro financial market is not currently well suited to IPOs.

And what of any M&A activity -- has Transmode’s success attracted any takeover offers? The company has been cited as a potential target for long-haul optical firm Infinera Corp. (Nasdaq: INFN), which is looking to beef up its European business and get into the metro optical market, which, according to Heavy Reading analysis, is set to grow in value from $1.6 billion globally in 2006 to $2.6 billion in 2010. (See Infinera Adds to Euro Footprint and Should Infinera Go Metro?)

As expected, Thedéen declines to comment on any such discussions. “We are focused on performance, not any exit strategy,” he adds.

— Ray Le Maistre, International News Editor, Light Reading

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