With the boom in optics, it was very temping for MRV Communications to think
about spinning off some of its prized assets. Well, that is what is going
to happen this week. The spin-off? It’s called
Luminent. Simply
put, expect it to be red hot.
The lead underwriter is CS First Boston and the price range is $13-$15 (the
company intends to issue 12 million shares) The proposed ticker symbol is
LMNE.
Luminent is a top developer of so-called singlemode fiber optic components
and subsystems geared for long-haul networks. The companys product line is
extensive, with both active and passive components. Active components
include light emitting diodes, receivers, transceivers, modulators,
transmitters and lasers. As for passive components, these include modules,
isolators, circulators, attenuators, fiber gratings and thin film filters.
The company has been in existence for about 12 years and during this time,
has built an impressive customer base. Examples: Cisco Systems, General
Instrument, Marconi Communications and Pandacom (these are the biggest customers
for Luminent). Luminent also has a strong distribution network, such as Cabletron Systems,
Extreme Networks and Foundry Networks.
A big part of Luminent;s strategy has been mergers and acquisitions. In the
past year, the company has acquired three firms: Fiber Optic Communications
(manufacturer of passive components), Quantum Optech (develops active and
passive components), and Optronics International (specializes in active
components).
The company is growing at a rapid clip. In the first six months of 2000,
revenues increased 53.1% to $43.6 million (compared to the same period a
year ago). Profits were $2.3 million. What’s more, the company announced
that its third quarter revenues would be about $35 million.
Like all other optical IPOs, Luminent should have a strong debut this week.
However, it could be short-lived. The reason is that MRV Communications
intends to distribute all its holdings back to shareholders in the next six
months. This will inevitably add quite a bit of dilution and put lots
pressure on the stock price.