ONI Goes For IPO

Optical Networks Inc. (ONI) http://www.opticalnetworks.com this afternoon filed to hold an initial public offering.

That ends the debate over whether the vendor of metro core DWDM products would go for a big IPO pop or take the acquisition route -- and has left Cisco Systems Inc. http://www.cisco.com looking in other directions for ways to round out its optical networking portfolio.

Until today, many pundits had predicted that ONI would take the acquisition course -- and most figured Cisco as the most likely buyer. They were basing that speculation on two facts: that Cisco was an investor in the company, and that ONI's HQ was practically on the Cisco campus in San Jose.

"I took one look at that building and thought that it was a not very subtle indication of where that company would end up," says the vice president of marketing at an optical networking start up, who spoke anonymously.

But it is not to be. Although it would be possible for Cisco to short circuit ONI's IPO by wading in with a Cerent-size offer, Carl Russo, group vice president for Cisco's optical networking group, was cold on the company during an interview with Light Reading this week at the OFC show in Baltimore. "They don't fit," he said.In fact, Russo took time out to dis' ONI's product line. "They're making one of those complex DWDM products and I struggle with that approach. Service providers want simplicity," he said.

Russo went on to say that Cisco is looking for an optical networking company to round out its portfolio of metropolitan area network optical products. "What do I want? I want a bolt-ass, stupid optical CSU/DSU that handles wavelengths for less."

Ordinarily, negative comments from Cisco in general, and Russo in particular, could put a dent in ONI's IPO aspirations. After all, Russo's last company, Cerent, has practically reinvented the Sonet market. And he is now the optical overlord at Cisco.

But this time around some think Russo's comments may be those of the jilted suitor. "He could just be pissed because he offered to buy them and they said no," says R.Scott Raynovich, New York bureau chief for Red Herring http://www.redherring.com