Calix plans $100 million IPO

<p>Petaluma's Calix Networks is preparing to go public next year and sell at least $100 million in stock, filing plans to stage the first IPO in Sonoma County in three years.</p><!-- Nothing to do. The paragraph has already been output --><p>The broadband equipment maker, which has long been viewed as the next IPO to emerge from Sonoma County's Telecom Valley, plans to use the proceeds to replenish its working capital, repay debt or possibly acquire other companies.</p><p>An IPO also could unlock a windfall for Calix employees. Many of its 400 workers have accumulated stock options that could be sold on the open market after the company goes public.</p><p>One technology analyst placed the value of the company at close to $1 billion. But lots of questions remain about the market for Calix shares and whether the company will follow through with a sale.</p><p>Fast-growing Calix is the largest supplier of broadband access equipment to small- and mid-size telephone companies in the U.S., said analyst Mark Lutkowitz of Telecom Pragmatics, a Nashville-based consulting firm.</p><p>"They're the No. 1 access vendor in that space," he said. "This could be the payoff."</p><p>Calix wouldn't comment on the filing Monday, citing the "quiet period" leading up to an initial public offering. No date for the sale was given.</p><p>Calix filed a notice of the proposed stock offering with the U.S. Securities and Exchange Commission on Friday. The company plans to list its shares on the New York Stock Exchange under the symbol "CALX."</p><p>The market for initial public offerings stalled during the recession, but it is starting to bounce back, according to analysts. Calix would be the first Sonoma County IPO since January 2007, when Petaluma biotech startup Oculus Innovative Sciences went public.</p><p>Calix makes optical networking technology that helps phone and cable companies deliver voice, video, data and other services over copper and fiber networks.</p><p>"They just introduced some new products that are very forward-looking," said Teresa Mastrangelo, a technology analyst at Broadbandtrends.com in Roanoke, Va.</p><p>The company stands to gain from the $7.2 billion U.S. broadband stimulus program, which provides grants and loans for rural phone companies to extend their broadband networks.</p><p>Calix already serves 40 percent of rural service providers, the company said earlier this year. At the end of September, Calix had 500 phone company customers with more than 32 million subscriber lines, mostly in the U.S. It also has cable customers and some carriers outside the U.S., mostly in Latin America and the Caribbean.</p><p>Its competitors include Alcatel-Lucent, Motorola, Ericsson, Occam Networks, Tellabs and Adtran.</p><p>Calix was founded in 1999 by former executives of Cisco Systems and Cerent Corp. Led by telecom veteran Carl Russo, it also has facilities in Minnesota and Massachusetts.</p><p>Today, it has about 300 employees at its headquarters in Petaluma and 100 at other facilities.</p><p>Calix received $50 million in venture capital in August, the largest Sonoma County venture deal since March 2008, when investors pumped $65 million into TriVascular, a Santa Rosa biotech company.</p><p>The company has grown rapidly. Sales jumped nearly 30 percent in 2008, hitting $250 million -- a figure that would place it among the 20 largest companies in the county. But Calix has never turned a profit, reporting a $13 million loss in 2008.</p><p>Since 1999, the company has accumulated a deficit of nearly $400 million, according to its filing with regulators. For the first nine months of 2009, Calix lost $25 million on sales of $145 million.</p><p>Calix has been more interested in building its market share than turning a profit, raising several hundred million in venture capital to grow, Lutkowitz said.</p><p>"You've got some real heavyweights backing this thing," he said.</p><p>Russo was CEO at Petaluma's Cerent Corp., which filed plans to stage a $100 million IPO in 1999 only to strike a deal a month later to sell the company to Cisco Systems for $7.3 billion.</p><p>"Carl has a good track record," Lutkowitz said.</p><p>Underwriting the sale are Wall Street firms Goldman, Sachs &amp; Co., Morgan Stanley, Jefferies &amp; Company and UBS Investment Bank.</p><p>You can reach Staff Writer Steve Hart at 521-5205 or steve.hart@pressdemocrat.com.</p>