It is irrelevant to their major invention--the powermux--which enables the emergence of circuit switched optical networks based on flexible wavelengths: any wavelength, any spacing, any bitrate. They now have many customers beyond the ones you mention and they have the single most impressive optical engineer in the industry, Simon Cao. I know nothing about lockups and such, but this company is in for the long haul, and the last mile too.
Your TGR article clearly states the PowerMux is Avanex's lead product, yet as of Dec. 31, 99% of shipments were for the PowerFilter. Since PowerMux was included in the June quarter, what happened to any follow-up orders? Was the initial order for beta testing and, if so, what's the status now?
From the 424b:
Our revenues currently are derived from sales of two products, PowerFilter and PowerMux. We commenced shipments of our PowerFilter in April 1999. To date, we have generated nearly all of our limited product revenues from sales of PowerFilter to a limited number of customers. Sales of PowerFilter accounted for 95% of our net revenue in the quarter ended June 30, 1999 and 99% of our net revenue in the quarter ended October 1, 1999 and the quarter ended December 31, 1999. We first shipped PowerMux in April 1999. In September 1999, we began shipping beta test units of our PowerShaper product.
I know about "circuit switched optical networks based on flexible wavelengths. . . " and yet I don't for a minute believe there's only one optical engineer who's working on these technologies. In my PM I mentioned one, Altitun, who is currently leading in tunable lasers. And with all due respect, if Simon Cao is the "single most impressive optical engineer in the industry," may I ask how many optical engineers you've met? You were at OFC --- I was there and heard you --- and you know there are hundreds if not thousands of extremely bright optical engineers working on these solutions. Simon Cao may be bright, he may even be brilliant, but I'm quite sure he'd be the first to admit he's not alone. A few names I came across at the conference: Olga Lavrova and David Blumenthal from UC Santa Barbara; L. Muller, C.R. Doerr, C.H. Joyner, and M. Zirngibl, from Bell Labs; M. Bouda, M. Matsuda, K. Morito, S. Hara, T. Watanabe, T. Fujii, and Y. Kotaki, from Fujitsu Labs; Koji Kudo, Kenichiro Yashiki, Tatsuya Sasaki, Yoshitaka Yokoyama, Kiichi Hamamoto, Takao Morimoto, and Masayuki Yamaguchi, from NEC; Mattias Adomat, Pierre-Yves Fonjallaz, and Fredrik Olofsson, from ACREO AB, Sweden; and B. Pezeshki, A. Mathur, S. Zou, H-S Jeon, V. Agrawal, and R.L. Lang, from SDLI --- all working on tunable lasers and filters.
In your response you say you've read my post listing the hurdles Avanex must overcome to succeed, and then add, "it is irrelevant to their major invention, PowerMux."
1) if they lose their major customer, they could have serious credibility problems much like Ciena when Sprint was their primary customer.
2) volume manufacturing will become a critical problem if they don't receive Bell Labs certification. Their products and their manufacturing lines have to be certified. I've followed JDS for over 2 years and SDL for over 1 1/2 years and know this is an issue with every new factory and every new product. In this industry, customers will not deploy products without proper ceritification. So even if you think the only critical factor to AVNX's success is their PowerMux, then I submit until it's manufactured, it's so much ink on a sheet of paper --- or evaluation unit in some carrier's lab.
3) Fujitsu licensing agreement --- I agree this may not be critical to the company's success, but if I were a shareholder, I'd certainly feel better if I thought they had a chance of being bought out. Fiber optics is not an easy field to break into. The only chance a company has is with a product that leap-frogs the competition. The challenge is to bring it to market before anyone catches up and if AVNX has any slow-down in certification, they lose their one advantage: time to market. PowerMux may succeed, but it's not a slam-dunk and you would be remiss to suggest it is.
. I know nothing about lockups and such, but this company is in for the long haul, and the last mile too.
If you don't know about lockups, you should. Bringing out coverage "in the nick of time" to allow the management (and major institutions) to meet un-lock stipulations makes your organization look bad even if they're innocent. As for being in for the long haul, I'd like to see PowerMux represent more than 5% of sales --- heck, how about manufacturing facilities built and certified ---- before buying stock in a company with $10 million in revenues, $50 million in debt, and a market cap of $8.33 billion.
Call me cowardly --- or give me private shares where the price and risk are in line.
Pat |
