Calix Networks mum on IPO rumor

By STEVE HART
THE PRESS DEMOCRAT

Calix Networks, a fast-growing Petaluma telecommunications equipment maker, isn't commenting on a report it's about go public. But telecom analysts say they're not surprised by speculation Calix is ready to launch a stock offering, following several years of explosive growth.

"There's an IPO in their future," said Simon Leopold, an analyst with Morgan Keegan & Co. in New York.
 

"They are always on the radar screen," said Teresa Mastrangelo, an analyst with Broadbandtrends.com in Roanoke, Va. "They are a very strong player in the independent market."
 

Calix, founded in 1999 by former executives from Cisco Systems and Cerent Corp., has doubled its customer base since 2005 and doubled annual sales to about $200 million. Last week, an influential telecom industry Web site, Light Reading, quoted anonymous sources who said the company will soon file with the Securities and Exchange Commission.

"That's not something we are ready to talk about," said Calix spokesman Kevin Walsh. "We have not filed anything with the SEC."
 

Neither Leopold nor Mastrangelo said they have information Calix is about to go public. However, both said they wouldn't be shocked if the company shows up on Wall Street to sell its stock.
 

A stock offering would raise cash to let Calix pay off investors or make acquisitions, Mastrangelo said.
 

Some analysts see Calix as a target for acquisition by a larger company, Leopold said.
 

"They aren't an 800-pound gorilla. They're still a tiny player compared to the Alcatel-Lucents," he said.
 

A stock offering could value Calix at $300 million to $500 million, according to analysts.
 

The venture-backed company makes broadband loop carriers that let telecom providers deliver voice, video and high-speed Internet service.
 

Calix focuses on small- to mid-sized independent telecom systems in the United States and Canada, but it's starting to snag larger customers, such as Sprint Nextel.
 

Calix is led by Carl Russo, who headed Cerent in Petaluma before it was acquired by Cisco for $7.3 billion in 1999.
 

Calix has raised $260 million from investors, including half a dozen venture capital businesses. In 2005, Calix acquired a Minnesota company, Optical Solutions Inc., which makes a next-generation fiber-optic technology known as GPON. The move helped Calix expand its customer list from about 200 to 400.
 

Calix now is the top North American supplier of broadband loop carriers and GPON terminals, according to two industry research companies. But it still hasn't reached the industry's largest customers, including Verizon and AT&T.

"They are pretty much a niche player, but everyone is aware of them as a competitor," Leopold said.

Calix has about 385 employees, including 250 at its Petaluma headquarters.

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