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NeoPhotonic (NYSE:NPTN) and Imperial Holdings (NYSE:IFT) IPOs are on tap this week. Ten others totaling $1B are also scheduled (see IPO calendar & valuation summaries).


NeoPhotonic's $70M IPO, with a market capitalization of $230M, at the price range mid-point of $10, is scheduled for Wednesday, February 2, 2011.

NPTN designs and manufactures of Photonic Integrated Circuit (PIC)-based modules and subsystems for bandwidth-intensive, high-speed communications networks. Its products enable high-speed transmission rates and efficient allocation of bandwidth over optical networks with high quality and low costs.

At one time, optical network optimizing integrated circuits was a dynamic growth market. Now there is significant competition, which is reflected in NPTN’s gross margin of only 30% - lower than competitors such as Finisar (NASDAQ:FNSR), which has a gross margin of 34% and JDS Uniphase (NASDAQ:JDSU), which has a gross margin of 43%.

Valuation: Annualizing results for the nine months ended September 2010, NPTN’s P/E is 62, higher than FNSR’s P/E of 27. JDSU showed a loss for the same time period. However, NPTN’s price-to-book ratio at the price range mid-point is 1.5, compared to 6 for FNSR and 4 for JDSU. Also, NPTN generates inconsistent quarterly results.

NPTN's Valuation Metrics

Market growth drivers: The rapid growth of bandwidth-intensive content, including HD and 3D video, music, social networking, video conferencing and other multimedia, is driving the demand for high-bandwidth products. The demand for bandwidth capacity is further intensified by the proliferation of network-attached devices, such as smartphones, laptops, netbooks, PCs, e-readers, televisions and gaming devices that are enabling consumers to access bandwidth-intensive content anytime and anywhere over fixed and wireless networks, including 3G, and increasingly, LTE networks.

Locations: R&D and wafer fabrication facilities in Silicon Valley are closely aligned with R&D and manufacturing facilities in Shenzhen, China.

Use of proceeds: $63M from sale of 7M shares. Balance for working capital and general corporate purposes.

Imperial Holdings

Imperial Holdings' $250M IPO with a market capitalization of $305M at the price range mid-point of $15 is scheduled for Friday, February 4, 2011.

With an unsuccessful business model, IFT is going to have a hard time completing its IPO. It’s only been profitable once, for 2007 - its first year of operation. Since then, IFT has generated a continuous stream of losses. Comparing the nine months ended September 2010 with 2009 revenue dropped 18% and losses increased 180%.

IFT Valuation Metrics

Business: Specialty finance company founded in December 2006 with a focus on providing premium financing for individual life insurance policies issued by insurance companies generally rated “A+” or better by Standard & Poor’s or “A” or better by A.M. Best Company. Also purchases structured settlements backed by annuities issued by insurance companies or their affiliates generally rated “A1” or better by Moody’s Investors Services or “A−” or better by Standard & Poor’s.

Use of proceeds: $228.3M from sale of 16.7M shares. $175M to support premium finance transactions. Up to $30M of the net proceeds to support structured settlement activities. Any remaining proceeds for general corporate purposes.

Source: This Week's Scheduled IPOs: NeoPhotonic and Imperial Holdings