Calix Networks to Price IPO This Week

| About: Calix, Inc. (CALX)

Calix Networks (NYSE:CALX), a North American provider of broadband communications access systems, is expected to price its IPO this week.

Business Overview (from prospectus)

We are a leading provider in North America of broadband communications access systems and software for copper- and fiber- based network architectures that enable communications service providers, or CSPs, to connect to their residential and business subscribers. We enable CSPs to provide a wide range of revenue-generating services, from basic voice and data to advanced broadband services, over legacy and next-generation access networks. In addition, our solutions are designed to minimize the capital and operational costs of CSP networks. We focus solely on CSP access networks, the portion of the network which governs available bandwidth and determines the range and quality of services that can be offered to subscribers. We develop and sell carrier-class hardware and software products, which we refer to as our Unified Access Infrastructure portfolio, that are designed to enhance and transform CSP access networks to meet the changing demands of subscribers rapidly and cost-effectively.

Offering: 6.3 million shares at $11 - $13 per share. Net proceeds (excluding proceeds from sale of selling stockholders) of approximately $25 million will be used to fund research and development activities and general corporate expenses and approximately $7 million will be used for capex.

Lead Underwriters: Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), Jefferies (JEF)

Financial Highlights:

Net revenues decreased by $17.5 million from $250.5 million for 2008 to $232.9 million for 2009 due to a significant customer contract in the first quarter of 2008 that did not occur in 2009...Gross margin was 33% for 2009 as compared to 32% for 2008...Research and development expenses as a percentage of revenue was 20% for 2009 as compared to 18% for 2008...Net loss for 2009 was $22.4 million as compared to $12.9 million in 2008...


The communications access equipment market is highly competitive. We compete with a number of companies within markets that we serve and we anticipate that competition will intensify. Alcatel-Lucent S.A. (ALU), represents our largest and most direct competitor. Alcatel-Lucent S.A. (ALU) enjoys strong supplier relationships with the largest U.S. ILECs, commands the leading market share position in DSL access multiplexers, and has a broad international business.

Other established suppliers with which we compete include ADTRAN, Inc. (NASDAQ:ADTN), LM Ericsson Telephone Company (NASDAQ:ERIC), Motorola, Inc. (MOT) and Tellabs, Inc (NASDAQ:TLAB). There are also a number of smaller companies with which we compete in various geographic or vertical markets, including Enablence Technologies Inc. (NYSEMKT:ENA), Occam Networks, Inc. (OCNW) and Zhone Technologies, Inc (NASDAQ:ZHNED). While most of these smaller competitors lack broad national scale and product portfolios, they can offer strong competition on a deal-by-deal basis. We have also begun to see competition from foreign suppliers, such as Huawei Technologies Co., Ltd., in the Caribbean and other select international geographies.

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