A very interesting discussion of the dramatic times during the late 90’s and the early 2000 timeframe. Read on.
SM: What were your sales pre-IPO? JR: I think in the ’98 period they were probably $30M. Our fiscal year 2000, which is when we went public, was $67M. In January of 1999 the IPO market came back.
We did a bake-off with all of the bankers and selected Merrill Lynch to be our lead, and we scheduled and started working towards an IPO in October. It was a really successful IPO, we went public at $19, the stock traded as high as $106 on the opening day, and closed at $89. We were the seventh largest increase on the first day of trading in the history of all the US stock exchanges. Our market cap was well over a billion dollars. I think our peak market cap in those days was as much as $5B.
SM: Are you talking about a $67M revenue with a $5B market cap? JR: Yeah, it was pretty unbelievable. Our sales in that fiscal year were $67M, and then our sales in the next fiscal year were $188M. So, we grew a lot in that year, but the world was booming still.
SM: And then it collapsed.JR: The whole market collapsed in 2000, 2001, and all of a sudden it was a whole new brand of reality. In early 2001, it was an unbelievable time, our sales were growing 30% a quarter. We could not find buildings to rent in Sunnyvale, we could not hire engineers fast enough, and our suppliers could not keep up with us.
Then the collapse happened, our peak quarter was $65M in sales, that was Q3 ’01, which is the quarter which ended in January 01. In two quarters our sales dropped 47%, and that sounds horrible, but in the same period Nortel’s optic division sales dropped 98%, and Lucent’s optic division dropped more than 98%, and in the end Nortell literally gave their optical division away.
SM: Did you have an option to buy that? JR: We did, but we decided that the amount of money it would take … remember this is an organization that had 1400 people, and at its peak it had well over 2,000 almost 3,000 people and it had $1.4B in sales in its peak quarter.
Remember the crazy thing is Corning, in ’99, had offered Nortel $100B in cash to buy this division. They turned it down because they thought it was not enough money. Now, in two quarters, their sales dropped from $1.4B to $23M. It was a crash that nobody could manage their way out of, all you could do was try to unload it, get rid of the division and make somebody else deal with it. Nortel came to us and had chosen Finisar as being in a complementary industry, and said that they would like to have us manage this division and have us be a supplier to them, because they knew they had all of these sole source products designed into Nortel systems which were built in this division.