2007 is big for optical/semi IPOs, but 2008 will be bigger

Implications: 1) Big year in 2007 for tech IPOs especially for optical/semi ones. 2) Expect 2008 will be even bigger.  3) Is the market ready for an optical-only public offering?   

Analysis: After the telecom bubble of the late 1990s popped, it took down with it billions of VC investment dollars and the aspirations of hundreds of optical startups. We werenot seeing any sign of recovery until post-bubble startups started to talk about public offering in 2006 time frame.

As a result we have seen a series of optical/semi IPOs going public in 2007 - Opnext, Optium, Infinera, Mellanox, Infinera etc. All of them were sucessful ones. For instance, leading optical networking component startup, Opnext (OPXT), a Hitachi spin-off went public in Feb. and raised $254 million selling around 17M shares with the stock opened at $17. 

Is the market ready for an optical-only public offering? Possibly still too early to say yes for now, as haven’t really seen all performed well and sustained in general after offering. But it is certain that more startups that are doing well enough to reignite the demand for telecom/networking stocks.

It is expected 2008 is going to be even bigger for more IPOs to emerge. If successful, Source Photonics will one of the first ones to be listed for '08.

Source Photonics, renamed for the mix of Luminent and Fiberxon (a subsidiary of MRV Comm), plans to go public offering up to $130 million. Its products are primarily transceivers, sold to telecom systems vendors, including ALU, Motorola, Tellabs, UTStarcom and ZTE, mainly for the fiber-to-the-premise deployments with an enviable position. Check its S-1, Source boasts that it alone has delivered "approximately 90% of all ONT transceivers shipped through Sept 30, 2007" in North America. It supplies components and subsys that now power at least two very high-profile, fiber-fed access networks, AT&T's U-verse and Verizon's FiOS. 

In addition, some other guesses would be the following list to watch:
- Force10
- Santur
- Neophotonics
- EGtran (merged Ezcon & Gtran)
- CyOptics
- Opvista
- Stratalight
- Cortina
- Optellian

At least one of the "ROADM" companies that is still standing alone like Adva will probably try to go if they are not bought out first, and perhaps one of the China module players like WTD. Companies like Teknovus or Broadlight would be good acquisition targets.

Also Huawei could decide to finally go IPO. That would be quite big were it to happen, as it would be the only really large systems OEM IPO on world markets and would give an interesting view into what investors think a counter to ALU or Cisco might be worth on the world financial stage.

2008 would be interesting year to watch who will go public? who will be acquired? And of course who will go finally belly up?