IPO in future for BTI Systems?

NOVEMBER 24, 2010 By Stephen Hardy -- BTI Systems President and CEO Steven Waszak says his company isn’t quite ready to go public. Its operations in the packet optical transport market need to mature enough to remove the lumpiness from the company’s revenue performance and deliver consistent results in high-growth markets. But between a recent funding infusion and the expectation of reaching income profitability next year, Waszak sounds like a man looking forward to adding an IPO to BTI Systems’ options.

Waszak’s Ottawa-based company announced November 9 that it had garnered what it termed “growth financing” that left the company with $11 million in new funding from existing investors as well as increased credit facilities from commercial banks and industry sources as well as working capital. It also reduced its long-term liabilities. The new commercial-based funding round helps transition BTI Systems from a reliance on equity-based funding from such continuing investors as Kodiak Venture Partners, BDC, Export Development Canada, GrowthWorks, and VenGrowth Capital Partners. (Fujitsu, for whom BTI Systems provides platforms on an OEM basis, also has invested in the company.)

The new funding also will help BTI Systems continue the momentum it has generated this year. Speaking with Lightwave shortly after the recent funding announcement, Waszak and Glenn Thurston, vice president, global marketing and sales operations, said they expect revenues to hit a record $50 million in fiscal 2010. This success will be driven by an 80% increase in direct sales, an expansion of its packet optical transport line, and a move into content-aware networking (see "BTI Systems unlocks video at the edge with content-aware networking").

This last initiative is part of a strategic focus on emerging service providers who are building new infrastructure to deliver cloud-based services. The company also has targeted carriers looking to play in the wireless backhaul market as well as transition their access networks from SONET/SDH to packet optical architectures.

Waszak and Thurston say the company still focuses primarily on North America but has enjoyed increasing success in Asia-Pacific. In fact, Waszak said that region could equal North America as a revenue source within the next two or three years.

Europe is another matter, however. A combination of a sluggish economy and a pronounced preference for incumbent suppliers has held back BTI Systems’ progress in the region, Waszak says. While he has emphasized direct sales since he joined the company in March 2009, Waszak allowed that it may be necessary to partner with an established vendor to grow in Europe, particularly among Tier 1 service providers.

With such pieces in place, Waszak feels confident of BTI Systems’ future. While saying that the company is “doing everything it can” to make an IPO filing a realistic option, he describes such an event as an “if and when” proposition with no specific timetable.

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