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filed S1 on 10/6/2000...Bear Stears to lead...wholly owned by MRVC...$108M ipo...competes with Terabeam and Airfiber in wireless optical components mkt with the potential to solve lastmile hurdles...has first to mkt advantage and will be a much anticipated ipo...will most likely start trading in Jan 2001...from S1 filing: We design, manufacture and market an optical wireless solution that delivers high-speed communications traffic to the portion of the communications network commonly known as the last mile, which extends from the end user to the service provider's central office. We believe our solution enables a fundamental shift in the design of the last mile by allowing service providers to quickly and cost-effectively bypass the incumbent carrier's copper-based network and offer high speed communication services to business users. Our target customers include existing and emerging competitive local exchange carriers seeking a comprehensive last-mile solution. Our solution is designed to be deployed in a switched mesh architecture, which means that the solution allows transmission of data between any two points on the network and enables full re-routing of traffic around a transmission link or equipment failure. The switched mesh configuration of our solution increases the sustained connectivity of the optical wireless transmission link in adverse weather conditions, including fog and rain. The volume of high-speed traffic across communications networks has grown dramatically as the public Internet and private corporate intranets have become essential for communication and e-commerce. According to Ryan, Hankin and Kent, a market research firm, Internet and other data traffic will increase over 4000% between 1999 and 2003. Although service providers are rapidly upgrading their fiber optic network infrastructure from the long-haul network to their central offices, upgrades to the last mile have not occurred and remain cost prohibitive, resulting in a bottleneck for the transmission of data traffic. To date, attempts to address this last mile bottleneck have included copper-based alternatives and wireless radio frequency alternatives which have proved only partially successful due to inherent deficiencies of these technologies. We believe optical wireless technology is the only alternative capable of meeting the growing demand for bandwidth, or transmission capacity, in a timely and cost-effective manner to address the last mile bottleneck. Through our solution, service providers are able to offer numerous value-added services, including the ability to immediately alter bandwidth allocations and to prioritize certain streams of delay-sensitive data communication, such as the transmissions of streaming video. Our wireless devices can be installed within a few hours since installation is not dependent on obtaining rights-of-way, government licenses and other permits. In addition, our products are scalable, which permits service providers to install new equipment as new subscribers are added on a pay-as-you-grow basis without sacrificing their initial investment. We currently have over 2,500 installations of our TereScope system. Since beginning operations, we have incurred significant expenses as we have developed our products and strategy. We had net losses of $3.2 million for the period from April 1, 1998, the date of our inception, through December 31, 1998, $2.3 million for the year ended December 31, 1999 and $6.9 million for the six months ended June 30, 2000. We expect to incur increasing manufacturing, research and development, sales and marketing, administrative and other expenses. As a result, we expect to operate at a loss for the foreseeable future. Furthermore, we face intense competition from a number of competitors, including TeraBeam Networks, AirFiber and Netro with respect to our TereScope products and Cisco Systems, Extreme Networks and Foundry Networks with respect to our OptiSwitch(TM) products. OUR RELATIONSHIP WITH MRV We are currently a wholly-owned subsidiary of MRV Communications, Inc. After the completion of this offering, MRV will own approximately % of the outstanding shares of our common stock or approximately % if the underwriters exercise their over-allotment option in full. Prior to the completion of this offering, we will enter into agreements with MRV that govern the separation of our business operations from MRV. The agreements between MRV and us also govern our various interim and ongoing relationships. All of the agreements providing for our separation from MRV were made in the context of a parent-subsidiary relationship and were negotiated in the overall context of our separation from MRV. The parties believe that the terms of these agreements are consistent with market-based terms. However, the terms of these agreements may be more or less favorable to us than if they had been negotiated with unaffiliated third parties. See "Risk Factors -- Risks Related to Our Relationship with MRV." RECENT ACQUISITIONS We recently benefited from two acquisitions by MRV. On May 1, 2000, MRV acquired all of the outstanding capital stock of Jolt Limited, an Israeli developer and manufacturer of optical wireless products, for approximately $57.7 million in MRV common stock and options to purchase MRV common stock. On July 12, 2000, MRV acquired all of the outstanding capital stock of AstroTerra Corporation, a San Diego-based developer and manufacturer of optical wireless products, for approximately $160.3 million in MRV common stock and options to purchase MRV common stock. MRV is contributing the capital stock of each of these acquired corporations and all of the assets of the optical access division of MRV to us as part of one overall plan to effect our separation from MRV. For further information on these acquisitions and the contribution of the acquired stock and assets to us, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Overview" and "Arrangements between Optical Access and MRV" later in this prospectus. | ||||||||||||
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