Also from the S-1:
CUSTOMERS
Our target customer base includes communications service providers and optical systems manufacturers. Customers who have placed orders for commercial shipment include MCI WorldCom, Hitachi, Osicom, Lucent and Cerent, which recently agreed to be acquired by Cisco Systems.
We began recognizing revenues from sales of our photonic processors in the quarter ended June 30, 1999. In the fiscal year ended June 30, 1999, sales to Osicom, MCI Telecommunications and Hitachi accounted for 33%, 32%, and 29% of net revenue, respectively. In the quarter ended October 1, 1999, sales to MCI WorldCom accounted for 92% of net revenue. We expect that the majority of our revenues will continue to depend on sales of our photonic processors to a small number of customers.
COMPETITION
The markets we are targeting are new and rapidly evolving, and we expect these markets to become highly competitive in the future. While we do not have any direct competitors in the photonic processor market today, we anticipate that other companies will in the future expand into our markets and introduce competitive products. We also face indirect competition from public and private companies providing products that address the same fiber optic network problems that our products address. The development of alternative solutions to optical transmission problems by competitors, particularly systems companies who also manufacture components, could significantly limit our growth.
Some companies in the optical systems and component industry may compete with us in the future, including Lucent Technologies, Nortel Networks, Alcatel, Fujitsu, JDS Uniphase and E-Tek Dynamics. These are large public companies that have longer operating histories and significantly greater financial, technical, marketing and other resources than we have. As a result, these competitors are able to devote greater resources to the development, promotion, sale and support of their products. In addition, our competitors that have large market capitalizations or cash reserves are much better positioned than we are to acquire other companies in order to gain new technologies or products that may displace our product lines. |
