Acacia Communications lowers IPO target

Optical module vendor Acacia Communications filed an S-1/A form with the Securities Exchange Commission May 2 that states it now thinks it will garner less from its planned initial public offering (IPO) than originally expected. The fact that the company now hopes to receive $119 million, down from the original $125 million target set in January, likely signals that Wall Street still views the optical component and module space with suspicion.

The filing, reported yesterday by the Boston Business Journal, indicates that Acacia plans to register 5,175,000 in stock and offer 4,500,000 shares, which it hopes to sell at between $21.00 and $23.00 per share. The company has not indicated when it plans to launch the IPO. As was the case with the original filing (see "Acacia Communications IPO a referendum on optical subsystems space?"), the company will list the shares on NASDAQ under the symbol "ACIA."

The S-1/A states that Acacia management plans to use the funds for working capital and general corporate purposes. The company says it has no plans to issue dividends.

The form states the company earned $35.4 million in gross profit on $84.5 million in revenue over the first three months of this year. Its net profit for the first quarter was just shy of $14.6 million.

However, the company stood to be a big loser in the wake of the ZTE export scandal had the proposed export restrictions been enforced (see "ZTE faces export sanctions from US Department of Commerce,""Optical component suppliers brace for ZTE export ban effects," and "ZTE receives temporary export restrictions reprieve"). ZTE is a significant Acacia customer. The fact that ZTE still hasn't completely settled its issues with the Department of Commerce may explain in part any negative signals Acacia management may have received from financial analysts and other sources within the investment community.

Acacia's proposed stock price appears optimistic compared to most of the leading publicly traded companies in the module space. In mid-morning trading today, Lumentum's stock was at $26.05. However, Finisar's was at $16.47, NeoPhotonics' shares stood at $12.03, and Oclaro's stock was selling for just $5.23.

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