InnoLight IPO: Google's Vertical Integration Without a Mess

June, 2015

We have been pondering the question of what happens when emerging optical component vendors, being financed by mega-data center operators to achieve the lowest cost possible, need more money, especially for new research and development purposes. The best answer, which is starting to become self-evident, is for the componentry company to go public, because with the undeniable cachet of a Google-backed firm (in the case of InnoLight Technology, Google Capital), the highest valuation can likely be achieved. The perceived worth of these newcomers in being purchased by a larger competitor in this presently unattractive business would apt to be much lower as there would probably be a considerably higher level of scrutiny given to matters like the potential to sell their devices to other than their “captive” buyers. For Google and other prominent enterprises, the IPO route for these firms...

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Inphi a Threat to InnoLight or Kaiam?

August, 2015

Once again, we have a natural affinity for the proposition of taking advantage of electronics, such as higher order modulation, to better enable optics by squeezing more data onto a single wavelength. However, by the time, Inphi is ready to ramp up production fully on its four-level pulse amplitude modulation devices, both InnoLight Technology and Kaiam will have sold a large quantity of their optical-centric componentry to both hyperscale Data Center (DC) operators as well as to OEM providers. Hopefully, within this time, Kaiam will have joined its direct competitor in filing for an IPO (assuming a certain amount of stabilization in the stock market) by stressing the former, sexier types of customers, “Google Plus,” forgive the pun. So, in effect, to whatever extent Inphi has success with PAM-4, for all intents and purposes, it will perhaps indefinitely, likely be more of a...

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Xtera IPO an Act of Desperation?

November, 2015

Apparently, Xtera Communications’ desire to exit the optical business can no longer be characterized at all as graceful, but as somewhat frantic. There had been speculation in the industry that the supplier had even backed out on the idea of filing the S1, and then afterwards, it cut the terms of the IPO in half. There is no question that IPOs universally have been deferred lately as a result of market instability. Although Xtera has truly compelling technology that amply differentiates itself from other vendors, the lack of a sexy story will not necessarily endear itself to investors. Also, they will probably be wary when it comes to its presently high level of customer concentration. However, if it is able to amply demonstrate a need for its technology by a number of the hyperscale data center players in the foreseeable future, then it may have a shot at attracting at least a...

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Acacia Communications IPO: A Compelling Story?

January, 2016

The optical industry was standing by for Acacia Communications’ S-1 for a lengthy amount of time, and there had been some recent conjecturing that it may not happen at all. The stakes were clearly high in that it appears to have been the only VC-backed 100G firm. While Acacia has made impressive penetration into the market with superior DSP technology, the question surrounds what it can do for an encore that would be good enough to attract investors in a meaningful way on Wall Street. Certainly, the process in Acacia going public was hardly done with a lot of fanfare, reflecting the current relatively low number of IPOs occurring in the technology sector in general, and the close to non-existent activity in the fiber optic space. The vendor had filed confidentially back in August (actually a common practice now for all companies with yearly revenues of less than a $1 billion). Then,...

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Acacia IPO Update: Still Pursuing Encore

May, 2016

In January, we first discussed Acacia Communications, which filed for its IPO confidentially in August of last year, and then rather quietly, but publicly, notified the SEC towards the end of December of last year of its plan to go public early this year. Although there was at least a little speculation at OFC 2016 that the vendor would not necessarily go through with the offering, it finally issued a press release announcement for the pricing this month. While Acacia has been a solid company technologically, there are still questions on what it can demonstrate to investors in order to wow them towards a higher valuation. So far, it appears that the supplier is just continuing to heavily push its Silicon Photonics (SP) development to the Street. Even assuming it has substantial leverage with this kind of integration, which we have had our doubts about in the past, the term, SP, as we...

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