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Company Zhone-ing in on public markets

Broadband network equipment start-up Zhone Technologies files for an IPO--the latest emerging telecom technology company to test Wall Street's enthusiasm.

Broadband network equipment start-up Zhone Technologies filed for an initial public offering of stock Thursday, the latest in a long line of emerging telecommunications technology companies to test Wall Street's enthusiasm.

Zhone makes a set of high-speed, or "broadband," equipment that can handle a combination of voice, video and data traffic and lets a network operator start a new service such as video-conferencing quicky. The company is hoping to raise $345 million as a result of the offering.

The company has targeted its equipment at the so-called "local loop" networks in urban areas and suburban regions that directly connect consumers to a telecommunications network.

It is one of several networking equipment start-ups that have gone public or filed papers to go public in recent months, taking advantage of a seemingly insatiable appetite for telecommunications technology stocks on Wall Street.

The company's first in-house product is set to launch this quarter. Zhone's first revenues came from acquired technology, as part of a relatively unique approach to building a company that included a huge private placement of $500 million in funding.

That has since shrunk to $124 million, according to a filing with the federal Securities and Exchange Commission.

The lead underwriter for the offering is Credit Suisse First Boston. Co-underwriters include Lehman Brothers, UBS Warburg, Thomas Weisel Partners and U.S. Bancorp Piper Jaffray. Zhone will trade under the ticker symbol "ZHON."

Details of the stock offering have yet to be determined.

The company listed Lucent Technologies, Nortel Networks and Cisco Systems as primary competitors.

Zhone reported losses of $127.7 million for the nine months of this year (ending Sept. 30), according to the filing. The company has accumulated a deficit of $157.7 million thus far, the filing said.

Zhone said it began generating revenue in the quarter ending March 31 and totaled $8.2 million for its newer products and $51.3 million for a set of technology it acquired from Premisys Communications last year.

At the end of September, Zhone had approximately 490 employees, according to the filing. In addition to $6.4 million in cash as part of a real estate deal with the city of Oakland, Calif., the company offered the city the option of purchasing up to 100,000 shares of Zhone for the land where Zhone is building a 300,000 square-foot headquarters.

Separately, Convergent Networks, a provider of broadband voice equipment, filed for a public offering late last month.