Networking IPO: Optium files an S-1: (OPTM)

Pennsylvania-based networking company Optium Corporation filed an S-1 last Thursday. The proposed ticker will be (NASDAQ: OPTM). The following are key details from the filing:

Company Description:

We are a leading supplier of high-performance optical subsystems for use in telecommunications and cable TV network systems. Since our founding in 2000, we have developed proprietary technology and products that enable transmission, reception and switching functionality for high-bandwidth, intelligent optical networking applications. We design, manufacture and sell a suite of optical subsystems including transceivers and transmitters. We have also recently launched a technologically innovative reconfigurable optical add/drop multiplexer, or ROADM, that enables dynamic wavelength processing, or DWP, which we refer to as our DWP ROADM. We believe that we have a fundamentally different product design approach from that of our competitors, allowing us to achieve mass customization of our products using common hardware platforms and customized embedded software. We also have implemented several unique automated and semi-automated manufacturing systems and processes designed to further improve our manufacturing yields and produce higher volumes of products than generally possible using manual production techniques.

Our optical subsystems are used in network systems that deliver voice, video, and other data services for consumers and enterprises in the long haul, metropolitan and access segments, referred to as the core to the edge, of telecommunications and cable TV networks. All of our products provide or support the highest transmission and/or reception speeds commercially used in carrier networks. Our customers are network systems vendors whose customers include wireline and wireless telecommunications service providers and cable TV operators, collectively referred to as carriers.

Key Financial Details:

Revenues: For the nine months ending April 30 2005, the company brought in $25 million vs. $48 million for the nine months ended April 29 2006. This jump is mostly due to the acquisition of Engana of Sydney, Australia in March 2006.

Margins: Gross profits for the nine months ending April 29, 2006 were $11 million, up from $6 million during the same period in 2005.

Notable Issues to Watch For:

We are under continuous pressure to reduce the prices of our products: The optical network equipment industry has been characterized by falling product prices over time. Many of our competitors outsource their manufacturing operations to locations with low labor costs, allowing them to offer their products at lower prices than if they used manufacturing facilities in the United States. If optical subsystem products become more standardized, the cost advantages of our embedded software approach to product customization will be reduced and our business would be significantly harmed.

Underwriters: Morgan Stanley, Credit Suisse

Select Competitors: Fujitsu (Public, Tokyo), Intel (INTC) and Opnext.