Avanex Inc. (AVNX)
About: Avanex is a developer of optical networking products. The company designs optical networking solutions around the company's series of photonic processors. Avanex offers two distinct lines of products, the PowerMux series of products which increase both speed and bandwidth over DWDM (Dense Wave Division Multiplex) fiber-optic networks. The company's other photonic processor is the PowerShaper which is an essential processor in the design and upgrading of current networks to more advanced networks. Using the PowerShaper, customers can effectively design and utilize fiber optic networks most effectively. The company is backed by CrossPoint Ventures, Sequoia Capital, and others.
Key Competitors: Lucent Technologies, JDS Uniphase, E-Tek Dynamics, Sycamore Networks
Financial Information:
1998 Sales: .5 million dollars
1999 Sales (quarter ended October 1): 4.4 million dollars
1998 Net Income: Loss of 9.2 million dollars
1999 Net Income (quarter ended October 1): Loss of 22 million dollars
IPO Information:
Range: 13 to 15
Float: 6 million shares
Post-Offering Shares: 62.5 million shares
IPO Valuation (based on a 15 dollar price): 937.5 million dollars
Underwriters:
Lead: Morgan Stanley Dean Witter
Others: Lehman Brothers, Robertson Stephens, U.S Bancorp Piper Jaffray
Analysis: Let's see.... optical networking, phenomenal sales growth, smallish float, really low valuation, and Morgan Stanley Dean Witter in the lead . What's not to like? Therefore Avanex is our pick of the week. Optical networking is one of the market's hottest sectors, check out a JDS Uniphase 1yr chart. Avanex is the leader in photonic processors and currently faces no key competitors although as we stated in the key competitors section, there are some networking giants poised to enter the fray. The deal's valuation is ridiculously low, only a little under 1 billion dollars. A more appropriate valuation would be somewhere along the lines of 6 billion plus when you base that on Sycamore Networks current valuation which is the most recent fiber optic networking IPO. On the underwriter side of things, few if any are better than Morgan Stanley Dean Witter who leads an All-Star team of underwriters. Overall expect a huge premium for our pick of the week. |
