Corvis seeks to raise $400 million in IPO

It wants to expand sales, marketing efforts

Maryland technology

May 06, 2000|By Mark Guidera | Mark Guidera,SUN STAFF

Corvis Corp., a Columbia optical networking equipment company started by the founder of Ciena Corp., has filed to raise $400 million in an initial public offering.

The filing comes at a time when the market for new public offerings has turned choppy. Still, if successful, it would be one of the largest IPOs ever for a Maryland-based company.

Company executives and analysts declined comment on Thursday's filing, citing Securities and Exchange Commission quiet-period rules.

The company did not set a date for the IPO, though that usually happens within 60 days of such documents being registered with the SEC.

The company said in its S-1 filing with the SEC that it plans, among other things, to use the money to expand sales and marketing efforts.

It also plans to expand manufacturing capabilities for its optical transmission and switching equipment, which it claims can move data over long distance networks more efficiently than currently available technology.

The market for such optical equipment is expected to grow to $14 billion by 2003, analysts forecast.

Still, Corvis faces some heady competition in the race for customers such as telephone giants which are looking to replace their wire- based systems with new optical networks which carry more data faster.

Formidable competitors include Lucent Technologies Inc., Cisco Systems Inc., Nortel Networks Inc. and Ciena.

Corvis was started by Ciena founder David R. Huber, 49, one of Maryland's most successful technology entrepreneurs, in June 1997 after he left the Linthicum company.

Ciena's IPO earlier that year was the best performing in the country at that time, giving Ciena a market value of $3.6 billion within a week.

Huber's new venture has won big backing from venture capital investors. Last year, Corvis raised $300 million in private investments, making it one of the leading fund raisers. Corvis reported in its filing that it doesn't have any revenue yet, and posted a $27 million loss for the three month period ending April 1.

The company does have two customers, Broadwing Inc. and Williams Communications Inc., two emerging powerhouses in the Internet communications infrastructure field. Both have pledged to buy $200 million worth of Corvis equipment over the next two years if field tests are successful.

In the IPO filing, Corvis notes that Broadwing and Williams have the option of buying up to $5 million each of Corvis common stock in the offering. Meritech Capital Assoc., one of Corvis' venture partners, can purchase up to 3 percent of the shares, the filing states.

Corvis' move to the public market comes at a turbulent time for the IPO market, analysts note. Investor interest in new offerings has slackened since the 34 percent dive in the Nasdaq composite index between March 10 and April 14.

The drop has prompted some companies to put IPO plans on the back burner, and those that are moving forward are finding that they must sell shares at lower prices than they had hoped, analysts said.

For example, Crown Media Holdings Inc., an operator of family television channels, raised $140 million last week after selling 10 million shares at $14 each. The company initially had hoped to raise $262.5 million.

Bloomberg Business News contributed to this article.

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