Force10 to Go Public, Plans $144M IPO

According to an S-1 filing with the SEC today, Force10 Networks is finally preparing to take the plunge and go public.  There was speculation for several years prior to the recession that Force10 would go public, but they never did.  Last winter the company bought fellow equipment maker Turin Networks, and has been rather quietly integrating the assets and playing defense for a year while carriers cut back on their network spending.  Now they plan to IPO, which frankly isn’t much of a surprise.  The market is more friendly toward new entrants right now, and with carrier returning to healthier levels there’s every reason to expect that favorable sort of attention to continue.   

And now finally we get to look at some financials.  Making sense of the pro forma results alongside the recession related revenue losses and cost cutting plus integration work is quite difficult, so perhaps the Q4 (actually fiscal Q1 for them I guess) numbers give us the clearest picture of where the company sits as we enter 2010.  Revenues were $43M at 44.7% gross margins, and the company checked in with a net loss of 7.6M.  Their revenue mix was split roughly 60/40 between their Ethernet and transport product sets, with Ethernet achieving the higher gross margins of around 50%.  They have $61.7M in cash on the balance sheet, and about $30M combined in debt and capital lease obligations, most of which is current.  That’s the quick snapshot anyway, the S-1 is fairly dense reading.

Alongside IPO speculation has always come M&A potential, but I don’t have a good read on whether Force10 is a likely target right now.  Anybody?

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Categories: Financials · Telecom Equipment