In the beginning was the word, not the atom.
And on this word we base our humanity. Unlike animals we have the ability to speak and a mind to understand who we are in relation to our world and to each other. Without words, whether spoken or signed, we would be like debris drifting in outer space. In order for words to have meaning there has to be trust --- trust that the words I string together into sentences will have value beyond the syllables that form them. A father tosses his toddler in the air and catches him before he hits the floor. That's trust. You write five or six pages of words and I take them at face value. That's also trust.
In the last TGR, I found several places where that trust was broken. Words were written that weren't true.
First, on the issue of patents, let's compare the April TGR with the SEC docs. TGR says, "At the helm of Avanex is a 38 year-old with more than 36 optical patents named Simon Cao, one of the leading figures in the history of optics."
From the S-1:
We have filed 25 patent applications in the United States and four patent applications internationally.
A search of the US Patents Office under Simon Cao shows one. Cao is the co-inventor and Fujitsu and Avanex are the co-assignees.
164.195.100.11
In another place the article discusses Avanex and says:
However hard it may be to focus in the midst of downward flight, I suggest that you steer your parachute toward its polychrome photonic trampoline, deployed in two buildings with close to 150,000 square feet of manufacturing space at Encyclopedia Circle. . . .
The Avanex will be familiar to most of you. Some of you who bought its shares in the aftermath of its $14 billion IPO may be ruing the ruinous day you learned it. But you can be assured that in those buildings, replete with some 450 animated Asian workers, you can find some of the most creative minds in all optics and the single most promising new product in the industry, the Avanex PowerMux or symmetrical multiplexer-demultiplexer.
Compare this to what's reported in the S-8:
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As of December 31, 1999, we had 251 full-time employees, 59 of whom were engaged in product development, 163 in manufacturing, six in quality, six in sales, marketing, application support and customer service, and 17 in finance, administration and operations.
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And from the 424b:
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In September 1999, we leased one building in Fremont, California for our corporate headquarters, totaling approximately 54,000 square feet, which includes sales and marketing, research and development, administration and manufacturing. This lease will expire in October 2009. Under the same lease, we were granted a right of first refusal until April 2000, which we have exercised, to lease an adjacent building, approximately 91,000 square feet, at a predetermined rate. We also lease approximately 6,000 square feet of office space in Richardson, Texas for sales and the operation of The Photonics Center. This lease expires in February 2006.
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Contrary to your claim that the company has "150,000 square feet of manufacturing space," they actually have 145,000 square feet for their entire corporate headquarters, including sales and marketing, research and development, administration and manufacturing. (The 6000 sq. ft. Richardson,TX, photonics center is for testing and sales.) And contrary to having 450 manufacturing workers, as of Dec. 31 they had 163. I suppose it's possible they ramped to 450 in under 2 months, though it would be difficult to get 287 additional workers trained and working at their stations in that amount of time. Did you decide because you'd doubled the manufacturing space you were compelled to fill it with workers?
As an aside, here's the S-8 on their manufacturing plans:
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We have entered into a five-year agreement with CMI under which a subsidiary of CMI, organized under the laws of the People's Republic of China, manufactures optical subcomponents for us in limited quantities at a small facility in Tianjin, China. They are building a new, larger manufacturing facility in Tianjin, which will not be operational until at least the quarter ending September 29, 2000. We cannot assure you that this larger facility will be completed on time or at all. Under the agreement with CMI, we have granted licenses to CMI to make in China and the United States, and to use and sell worldwide, the licensed components. We also granted them a license to use some of our technical information and manufacturing process know-how in China and the United States. These licenses are exclusive in China and non-exclusive elsewhere. As a result, CMI can manufacture and sell optical components based on our technology to third parties, including our potential competitors. . . .
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In summary, Avanex has
* 1 patent, not 36
* 145,000 sq. ft. for entire headquarters, not 150,000 sq. ft for manufacturing
* 163 skilled laborers, not 450
Am I being nit-picky? Absolutely. Does any of this matter? Only to the extent that words form the basis of trust.
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