Calix raises $100 million

AUGUST 31, 2009 By Stephen Hardy -- Calix (search Lightwave for Calix) has defied the credit crunch by announcing it has raised $100 million in financing. The access equipment vendor has garnered $50 million in equity from existing investors and $50 million in debt financing via Silicon Valley Bank. According to a company source, the company plans to spend the money in four areas where it sees opportunities for growth.

Calix also announced that it has added three new directors to its board, Michael Marks of Riverwood Capital, Adam Grosser of Foundation Capital, and Robert Finzi of Sprout Group.

According to Geoff Burke, senior director of corporate marketing at Calix, the money will be earmarked for expansion in four areas:

• Fulfilling orders generated by broadband stimulus funding: Burke says that Calix is tied to more than 100 proposals, which range in size from "a couple hundred thousand to a couple hundred million dollars." More than 90% of these proposals involve FTTH, he asserts. The vast majority of these involve GPON, Burke adds.
  
• Expansion into Latin America: The company has been quite successful in the Caribbean, Burke says, and therefore hopes to extend that success farther south.
  
• More aggressively target cable operators: While the company has introduced RF over glass (RFoG) capabilities for its systems, Burke says the majority of the company's current work with cable operators involves the support of business services through GPON. That said, he expects RFoG to find increasing application.
  
• GPON for mobile backhaul: Burke touts Calix as the market leader in terms of GPON-based mobile backhaul applications. The company foresees continued growth within this niche.
  

Calix will apply a significant amount of the new funding to its internal infrastructure, Burke says. This includes everything from boosting R&D to adding sales force and doing what it can to "ensure supply chains are enabled." While he says that the company is always on the lookout for acquisition opportunities, he says this latest funding round is not directly associated with M&A.

"As we look at the market today, we see extraordinary opportunities for our customers," said Carl Russo, president and CEO of Calix. "A virtuous cycle is emerging around communications service providers as the thirst for broadband services drives demand. Technological innovation creates the opportunity for new network capacity and efficiency and Broadband Stimulus around the globe enables unprecedented vehicles for changing the economics of broadband deployment. Calix, with our Unified Access solutions portfolio, is ideally suited to facilitate this transformation and assist our customers in becoming an entirely new type of service provider. These new funds and the stellar new additions to our board will ensure that Calix has the financial strength and experience in place to help our customers take full advantage of this opportunity."

As far as the new board members are concerned, Burke says the company has been trying to add Marks to its leadership team for some time. In particular, Marks brings supply chain expertise due to his 13 years as CEO of Flextronics International Ltd., as well as M&A expertise. Burke described Grosser as being particularly well connected within the Silicon Valley VC community as well as an expert on the content aspects of broadband service provision.

Finzi replaces another member of the Sprout Group on the Calix board. While he also sits on the board of Aurora Networks, Burke suggests that any potential conflicts of interest have been worked out long ago.

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