Fiber magnates
In its February 7 initial public offering, Ciena (Nasdaq: CIEN) gave entrepreneurs and investors a glimpse of what could be in store for high-technology finance this year. The company raised $115 million and achieved the largest valuation of any early-stage venture-backed IPO in history.
Ciena was priced at $23 per share and has 93 million shares outstanding, giving it a valuation of $2.1 billion. The stock price soared 61 percent on the first day to $37 per share, allowing the company to close its first day of trading with a $3.4 billion valuation.
Ciena's market value at opening was greater than Apple Computer's, the next-largest VC deal, which opened at $1.2 billion in 1981. (Adjusted for inflation, Apple's market value was $2 billion.) Other top venture-backed IPOs include Netscape, Xylan, and Diasonics, which each attained a $1 billion valuation at the time of their IPOs.
As a startup, Ciena raised approximately $25 million from a large syndicate of VC firms. The three initial VC investors were InterWest Partners, Sevin Rosen, and Vanguard Venture Partners. Subsequent venture investors included Bessemer Venture Partners; Jafco America Ventures; Charles River Ventures; Weiss, Peck & Greer; AT&T Ventures; and Star Venture Entities.
The company was founded in 1993 to design, manufacture, and sell dense wavelength division multiplexing systems for public networks. Ciena is targeting high-capacity links between major cities in long-distance networks. Although approximately 90 percent of all fiber laid in the ground is unused, many fiber backbones are already at maximum capacity. Added to this, carriers are trying to provide new broadband services. Ciena's optical amplifier offers these carriers a cost-effective way to maximize bandwidth without laying new fiber. The company competes with Lucent Technologies and Pirelli but is unique in that it is considered to be a pure play.
Ciena earned $14.7 million on revenues of $55 million for the fiscal year ending in October 1996. The IPO was led by Goldman Sachs and comanaged by Alex. Brown & Sons; Wessels, Arnold & Henderson; and William K. Woodruff & Company. Since its debut, the stock reached a high of $44 on February 26, and at our press time, it was trading at $31. |
