<OT - fiber optic IPOs> ONI Leads Fiber Charge With Sizzling $200M IPO
ONI Leads Fiber Charge With Sizzling $200M IPO
Jun. 19, 2000 (Fiber Optics News, Vol. 20, No. 25 via COMTEX) -- By Mark Mueller
The stock market's infatuation with newly traded fiber optic firms continues
unabated, despite volatile conditions limiting initial public offerings in most
other industries.
The eagerly anticipated IPO for San Jose, Calif.-based ONI Systems [ONIS], a
fiber optics equipment maker, has turned out to be the strongest new issue for
June (FON, 5/29). The 8-million share offering was priced at $25 per share, far
above the $16 range initially planned by the firm, a sure sign of demand for the
stock.
The ONI IPO did not disappoint on its June 1 release, rising nearly three-fold
on its first day of trading. The stock, underwritten by Goldman Sachs & Co., has
subsequently traded as high as $99.19, and rested at $88.56, at market close on
June 14. ONI raised nearly $200 million from the offering.
The fiber optic IPO darling for May, Santa Clara, Calif.-based New Focus Inc.
[NUFO], also continues to perform well in the new issue after-market. The
equipment maker's IPO has risen from an offering price of $20 to as high as
$93.63 at market close on June 14.
According to James Parmalee, analyst for investment firm Credit Suisse First
Boston, New Focus is poised to make big news in the upcoming year. He predicts
the firm soon will get some major customer contracts from suppliers like Nortel
Networks [NT] or Lucent [LU].
Credit Suisse has initiated New Focus coverage with a "buy" rating, and Parmalee
expects the stock to rise as high as $105 within the year. He also predicts net
losses for the firm of 60 cents per share and 38 cents per share for 2000 and
2001, respectively.
The Next Pick To Click
The good fortunes of fiber optic-related new issues also could have a positive
effect on more entrenched companies in the industry. For example, NorthEast
Optic Network [NOPT], a Westborough, Mass.-based provider of fiber optic
transmission capacity for carriers, received a positive review from Linda
Meltzer, analyst for investment firm UBS Warburg.
Meltzer sees NorthEast as a pure play on the growing demand for broadband
connectivity, and assigned a "buy' rating for the firm, with a price target of
$80. The company's stock was at $42.22 on June 14.
NorthEast's NEON Network consists of 1,000 route miles and more than 70,000
fiber miles throughout a geographic region that has the highest concentration of
communications traffic in the country. The network blankets 540 cities and towns
in six Northeastern states, including Boston and New York City.
The company, which went public in July 1998, has not shown profits recently.
NorthEast's net loss for the three months ended March 31 amounted to
approximately $8.3 million, or 50 cents per share, compared to a net loss of
about $5.3 million, or 33 cents per share, for the same period in 1999.
Two More Joining The Fray
Other privately-held fiber firms are heeding the success of ONI and New Focus by
making the move to go public. On June 9, Vanier, Quebec-based EXFO
Electro-Optical Engineering filed to sell $151.8 million of stock.
EXFO, a maker of fiber-optic test equipment for telecommunications providers,
plans to trade the stock on both the Nasdaq and Toronto Stock Exchange. The
company considers itself to be the largest manufacturer of test, measurement and
monitoring instruments exclusively dedicated to fiber optics.
Formed in 1985, EXFO only entered the market for remote fiber test systems in
1999, however. Company sales have increased 55.4 percent, from $18.7 million for
the six months ended February 28, 1999 to $29.1 million for the six months ended
February 29, 2000.
Another fiber optics firm, WJ Communications, also decided to take the IPO
plunge this month. On June 2, the Palo Alto, Calif.-based firm registered to
sell $100 million of common stock. Proceeds from the deal, underwritten by Chase
H&Q, will be used to repay debt and fund capital expenditures.
WJ Communications makes broadband communications products for fiber optic,
broadband cable and wireless communications networks, and the firm also has 40
years of experience in developing radio frequency products to allow the
transmission of voice, video and data.
However, it wasn't until a January company-wide reorganization that the firm
focused exclusively on RF products, as several other non-related businesses were
divested.
ONI Systems At A Glance
Address: 166 Baypointe Pkwy San Jose, CA 95134-1621 Phone: 408-965-2600
Fax: 408-965-2660 onisystems.com CEO: Hugh C. Martin Founded: Jan.
1998
1999 Sales (mil.): $3.0 1-Yr. Sales Growth: 75.1% 1999 Net Inc. (mil.): ($43.3)
1999 Employees: 202 IPO Information Date went public: June 1, 2000
Filing Date: March 10, 2000 Proposed offer price: $21.00 to $23.00 Actual offer
price: $25.00
First day open: $80.00 First day close: $82.56 Shares offered (mil.): 8.0
Offering amount (mil.): $200.0 Post-offering shares (mil.): 123.877
Underwriters: Goldman, Sachs & Co.; Banc of America Securities LLC; Chase H&Q;
Robertson, Stephens & Company
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