Prospectus Summary
You should read the following summary together with the more detailed information regarding our company and the common stock being sold in this offering and our financial statements and notes appearing elsewhere in this prospectus.
Avanex designs, manufactures and markets fiber optic-based products, known as photonic processors, which are designed to increase the performance of optical networks. Our photonic processors offer communications service providers and optical systems manufacturers greater levels of performance and miniaturization, reduced complexity and increased cost-effectiveness as compared to current alternatives. We believe photonic processors will enable the next-generation, all-optical network, which is necessary to support the increasing demand for bandwidth.
The proliferation of the Internet and the increase in activities such as electronic commerce, the transmission of large data files, Internet-based businesses and telecommuting, have caused a significant increase in the volume of traffic across the communications infrastructure. According to Ryan, Hankin & Kent, a leading market research and consulting firm, Internet traffic will increase from 350,000 tera bytes per month, or TBpM, at the end of 1999 to over 15 million TBpM in 2003. This market research suggests that, at the end of 1999, the volume of Internet data traffic will have surpassed the volume of voice traffic. In an effort to increase network capacity and performance, the transport layer, or medium over which the data traffic is transmitted, is currently being upgraded from electrical to optical transmission. Despite the advances that have occurred in the existing communications infrastructure, there are still many challenges to deploying a next-generation, optical network, including:
- the need to prevent an optical signal from degrading by converting it into an electrical signal and back into an optical signal at frequent intervals across a network;
- the need to carry increased amounts of data in each wavelength of light;
- the high cost of the optical products needed for an optical network; and - the difficulty in deploying large pieces of optical equipment.
Our PowerFilter and PowerMux products are designed to overcome the technological challenges, such as chromatic dispersion and attenuation, and the cost and deployment challenges inherent in optical networks. Our products are designed to enable the transmission of more data in a wavelength of light, at higher speeds and across greater distances in a network, than currently available optical technologies. Our customers can also optimize the utilization of limited network space because we miniaturize our products and combine multiple components in a single package. We design our products to work within existing network deployments, as well as in future optical networks. We believe our photonic processors enable communications service providers and optical systems manufacturers to cost-effectively maximize the capacity, or bandwidth, of optical networks to facilitate next generation services and applications, such as virtual private networking, or VPN, and business-to-business, or B2B, electronic commerce.
Our objective is to be the leading provider of innovative, fiber optic-based solutions that enable our customers to deploy and optimize fiber optic networks. In order to achieve this objective, our strategy is to leverage our technology leadership and expertise to develop new products and expand customer relationships. We also intend to expand our manufacturing facilities, automate our manufacturing processes and extend awareness of our brand. Our marketing strategy is based on a push-pull approach. With our push approach, we target optical systems manufacturers that can buy our products and then resell them as part of their optical solutions. Using our pull approach, we target communications service providers that can create demand for our products by directly purchasing, or requiring that their systems incorporate, our products. We believe this approach will drive demand for our products and help enable the transition to the next-generation, all-optical network.
THE OFFERING Common stock offered........................ shares Common stock to be outstanding after this offering.................................... shares Use of proceeds............................. We intend to use the net proceeds for general corporate purposes, including capital expenditures and working capital. See "Use of Proceeds."
Proposed Nasdaq National Market symbol...... AVNX The above information is based on the number of shares of common stock outstanding as of October 1, 1999 and excludes 799,400 shares of common stock issuable upon exercise of outstanding options with a weighted-average exercise price of $.11 per share, 19,565 shares of common stock issuable upon exercise of an outstanding warrant with an exercise price of $5.75 per share and 180,486 shares of common stock reserved for future awards under our stock plans.