VCs LINE UP TO FUND MULTIPLEX

In a market where almost every optical equipment maker is posting earnings warnings, this three-year-old upstart has yet to experience a softening in demand for its optics gear. That may explain why VCs queued up to put $110 million into Multiplex's account.

Multiplex's products, which include tunable lasers, high-powered lasers, and signal receiving gear, brought in $12 million in revenue last year, CEO Won Tsang says. He expects that number to increase to $65 million for 2001. The company's equipment is designed for the metro area network (MAN), or the part of the network that resides within cities. There aren't many suppliers of high-end active components for the MAN, Mr. Tsang explains, which creates more demand for Multiplex's gear. In contrast, the long-distance market has "matured," and begun to tighten, he adds.

Perhaps, but there is evidence the metro space is becoming oversaturated with competitors as well. Over the last few months, we've seen a number of so-called tunable laser companies receive funding, the most notable being Agility. That laser maker received $70 million in second-round funding in October 2000.

Still, even with market cutbacks, it's a good time for Multiplex http://www.multiplexinc.com) to expand, Mr. Tsang says. He reckons the company's early expansion will give Multiplex an edge when the market comes back, making it bigger and tougher to beat. Though Mr. Tsang has already spent $27 million building the company's manufacturing plant, he plans to increase its office space from 35,000 square feet to 230,000 square feet over the next two years.

Customers include Alcatel, Marconi, and JDS Uniphase, which, incidentally, is also Multiplex's biggest competitor. Mr. Tsang is planning an IPO for third quarter 2001. Profitability: 2002.

FUNDING DETAILS -- Location: South Plainfield, NJ; Amount: $110 million; Prior funding: $23.5 million; Lead Investor: N/A; Other Investors: Walden Group of Venture Capital Funds; Taya; China First Steel; several new, undisclosed strategic and financial investors.

--Steve Silverman

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