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Infinera files for secondary share offering

The Californian company looks set to raise more cash as it develops the next generation of its photonic integrated circuits (PICs) and eyes a manufacturing expansion.

Infinera, the Californian manufacturer of digital network systems based around its complex InP photonic circuits, is considering raising more cash via a secondary public offering of common stock.

In its October 12 filing with the US Securities and Exchange Commission (SEC), the Sunnyvale company outlines its proposal to sell 5 million shares, around 5 percent of its common stock.

Infinera made its debut as a publicly-traded company as recently as June 2007, raising just over $209 million on the sale of 14 million shares at $13 in the process.

Since then, the company s value has near-doubled and reached a market capitalization of just over $2 billion. If sold at the current price of around $25, those 5 million shares would be worth some $125 million.

If Infinera does go ahead with the offering, some of the cash could be used in the development of a new generation of photonic integrated circuits (PICs) and at the InP wafer fab where these chips are manufactured.

The PICs are the key building blocks inside Infinera s digital network systems, and feature more than 60 discrete optical components in just a single transmit/receive chip pairing.

In its latest SEC filing, Infinera says that it will incorporate even more functionality into its next-generation PICs, and continue investing in its PIC manufacturing capability.

The company is also targeting sectors outside its traditional focus area of long-haul networks, looking to increase its addressable market by introducing products specifically designed for high-speed metropolitan applications.

Since it launched the digital network system three years ago, 38 different customers have bought Infinera s system for network deployment. Level 3 Communications is the most important of those customers, accounting for more than half of Infinera s revenue over the past 18 months.

As well as reducing its relatively high dependence on Level 3 by diversifying its customer base, Infinera should be able to bolster its cash reserves significantly if it does go ahead with the share offer. As of June 30, after issuing its most recent financial results, Infinera listed cash and cash equivalents of nearly $200 million on its balance sheet.

On the flip side, the company has posted some hefty-looking net losses in the past 2-3 years. However, these are partly a reflection of how Infinera phases its revenue figures, and company management expects the bottom line performance to improve markedly in the near future.

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