Petaluma's Calix gets $100 million boost

<p>In a sign that Sonoma County's technology sector may be emerging from recession, Petaluma's Calix Networks said Monday it has raised $100 million in financing to expand.</p><!-- Nothing to do. The paragraph has already been output --><p>The deal will help Calix respond as telecommunications companies start spending again on network upgrades.</p><p>“This is big,” said Michael Howard, principal analyst at Infonetics Research, a Silicon Valley firm that tracks telecom industry trends. “It gives them a lot of horsepower to grow.”</p><p>Carriers cut equipment purchases when the economy spiraled downward, “but we've hit bottom and started back up,” Howard said. “We think spending is going to come back pretty strongly in the second half of this year.”</p><p>Calix also stands to profit from the $7.2 billion U.S. broadband stimulus program, signed into law by President Barack Obama in February, that helps rural phone companies extend their broadband networks. Calix already serves 40 percent of rural service providers.</p><p>Only about 38 percent of America's rural homes have access to high-speed Internet connections, compared to 57 percent of city dwellers and 60 percent of suburban residents.</p><p>Rural network operators are applying for the stimulus funds now and they'll start flowing in early 2010.</p><p>“We see extraordinary opportunities for our customers,” said Calix CEO Carl Russo.</p><p>More than 100 Calix customers already have applied for the stimulus loans and grants, the company said.</p><p>Calix makes optical terminals and access platforms that let telecom providers deliver voice, video and data over their networks. The company doesn't disclose employment data, but it has an estimated 400 employees, including 300 at its Petaluma headquarters.</p><p>The financing deal includes $50 million in venture capital from Calix' existing backers and $50 million in debt financing from Silicon Valley Bank.</p><p>The $50 million in private equity is the largest Sonoma County venture deal since March 2008, when investors pumped $65 million into TriVascular2, a Santa Rosa biotech company.</p><p>Venture funding for Sonoma County technology companies has dropped sharply since mid-2008. Local startups raised just $65 million in the past four quarters, compared to $163 million for the same period a year earlier, according to Dow Jones VentureSource, which tracks private equity deals.</p><p>The Calix deal shows investors believe in the company, said Geoff Burke, Calix' marketing director.</p><p>“The amount is a real vote of confidence from an investor perspective,” he said.</p><p>Privately held Calix was founded in 1999 by former executives of Cisco Systems and Cerent Corp. It also has facilities in Minnesota and Massachusetts.</p><p>Calix is growing despite the recession, Burke said, adding 80 customers last year and generating more than $250 million in sales, up 29 percent from 2007.</p><p>In June, the company announced it was expanding its field and corporate operations to meet customer demand.</p><p>Calix will use some of its new capital to move into new markets, including cable network and wireless access, Burke said.</p><p>Calix isn't the only Telecom Valley company hoping to gain from the broadband stimulus program. Tellabs, Alcatel-Lucent and Force10 Networks, which all have engineering facilities in Petaluma, said they're also working with eligible customers.</p><p>Even without stimulus funds, large network operators such as AT&T and Verizon are poised to expand, Howard said. They need to keep up with an explosion of Internet traffic.</p><p>“We've been in a downturn, but traffic didn't tick downward at all — it just kept growing,” he said.</p><p><i>You can reach Staff Writer Steve Hart at 521-5205 or steve.hart@pressdemocrat.com.</p>