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A Kaiam Strategic Partner: Google?

September, 2014

Concerning the recent $35 million announcement by Kaiam of equity funding, our intelligence indicates that one of the two strategic partners is Google. We also think the other partner is Microsoft. In addition, we believe that the total valuation is two to three times revenue -- so over $70 million. While Kaiam has clever packaging, we are not convinced that it has the lowest cost in the market. Nevertheless, the supplier has benefited from getting out there early in the data center/datacom space. It is likely that it owns the 10x10 business in that sector. Unquestionably, signs of two giant enterprise firm funding Kaiam may be about ensuring direct access to unique 100G technology. Perhaps it is the vendor’s Hybrid Mixer PLC – and/or maybe something else that could possibly be on the drawing board that involves a coherent, serial 100G device. More practically speaking, there is a higher ...

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Coriant: Market Perils on Investment in Distressed Assets

December, 2015

There can be a fundamental problem when private equity firms buy up companies in a depressed condition in that the overwhelming desire to sell off those assets at the most favorable valuations can be in conflict with the best interests of the market, especially when the overall space is not that healthy. In the case of Coriant, it is one thing if it is a relatively quiet participant in striving to accommodate “third party [O]pen [L]ine [S]ystems” (OLSs), it is quite another to be an extremely aggressive cheerleader in order to possibly increase relatively short-term revenue, because at least on its face, it is not in the best long-term interest of the rest of the transport suppliers (as we pointed out in a recent article). While we continue to believe there will be hurdles in moving to OLS on the public network side, we have found out that this activity has started already in the Data Ce ...

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Coriant Not Culturally a High-End Leader

November, 2016

Although there is a lot of significance in certain quarters being attached to AT&T’s trial of Coriant’s 400G system (as we recently pointed out on our daily updates page), the engineers formerly with Tellabs and Nokia Siemens Networks (NSN), which make up the heart of the private equity-financed vendor, do not seem to have a great deal of familiarity with being a leading player at higher data rates for traditional long-haul and short-haul service providers. Tellabs itself was a metro transport player with its primary focus on lower speeds including optimizing around 10G as well as delivering very efficient 10-gig services, while allowing for the co-existence of 100G services within the same channel plan. While NSN made some penetration with 100G technology, and engaged in activities with some of the European telecom providers involving hero experiments at 400G, there was no significant d ...

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Xtera’s New CFO May be Its Only Hope

November, 2016

Joe Chinnici was unceremoniously let go by Ciena, as the ex-Nortel executives at the company evidently advocated replacing him. In complying to the Sarbanes-Oxley requirements, there were initial glitches in those new rules, and deals were being held up – he apparently became a scapegoat. Along with the CTO, he was an important check against the Nortel coup. Now Chinnici has taken on the major challenge of turning around Xtera Communications, which will hardly be an easy task. If the very competent executive is successful, it would be one of the most remarkable accomplishments in the history of the optical space. Toward the end of last year, we wrote an article called, “Xtera IPO an Act of Desperation?” While it could still be debated whether the vendor was in a frantic state to exit, it certainly was very anxious to have another round of funding. Given that it had been around for so lon ...

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Finisar Execs Should Get Out Now

December, 2016

While the CEO of Finisar has been associated with the company for over 25 years, the average time that the rest of the executive management team has been in the optical components space is around 18 years. Undoubtedly, they have to understand how terribly unique their situation has become after years of mounting obstacles that have made its business quite unattractive in the recent past. The combination of the Street inexplicably driving up the valuation of a single company, Acacia Communications, to extremely unjustified levels, which positively affected other vendors in the market, along with the exploding demand for componentry in only one country, China, could not have been anticipated. It could be said with a high level of confidence that such a confluence of events will never happen again. Although we believe that Finisar still has room to somewhat improve its financial position in ...

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