Force10 IPO — Better Late Than Never?

Force10, the networking gear maker founded in 1999, filed for an initial public offering today, as part of a rush of companies seeking to hit the public markets while the window seems open. IPO filings are up more than 900 percent in 2010 according to Renaissance Capital, which tracks the IPO market. Despite its relative youth for an IPO filer this year, Force10 represents not a hot new startup seeking access to the public markets, but a grizzled 11-year-old veteran trudging toward an IPO because it simply has to exit, and no buyers have emerged,

At least 13 venture firms firms have invested more than $205 million in Force10 within the last five years alone. The company is seeking to raise $143.75 million through its offering. But given the amount of time its investors have waited, a history of losses, a complicated balance sheet thanks to a series of transactions, and a slew of larger competitors, Force10’s IPO looks a bit like a shotgun wedding.

Force10 sells telecommunications networking gear as well as 10 gigabit Ethernet gear for the data center. It’s the data center market that’s growing most for Force10, although the opportunity to provide aspects of the core network and backhaul components for telecommunications providers as they switch to all-IP architectures is another mid-term opportunity.

Three years ago, after a $60 million Series F round of funding, Om wondered when Force10 would file to go public. But any company that didn’t make it before the fall of 2008, and was stuck staying private thanks to the economic freeze and the credit crunch. In 2009 it purchased Turin, a maker of wireless backhaul gear. It reported pro forma sales (which combined Force10 and its Turin acquisition) of $199.2 million in 2009 and a loss of $76.3 million.

Force10’s IPO may not reflect the return of the big ticket technology IPO as much as it reflects a lack of buyers for the business and the chance to get an exit while IPOs are possible. Instead of comparing it to Tesla, the electric vehicle maker that recently filed to go public, or Silver Spring, a smart grid startup that is expected to file soon, a better comparison would be Calix, the telecommunications gear maker that has raised a similar amount of money in its long history, and filed late last year. Given that too many hot IPOs can overshadow older candidates, perhaps it’s better for Force10 that popular online businesses such as Yelp or Facebook are holding off on IPOs this year.

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