http://dallas.bizjournals.com/dallas/stories/2007/03/19/story5.html?t=printable
Navini reloads capital for pivotal year ahead
Telecom giants entering wireless segment at the heart of company's plan
Dallas Business Journal - March 16, 2007
As it enters an important year in its efforts to become a significant
player supplying equipment for the emerging wireless technology known as
WiMax, Richardson's Navini Networks has re-opened a fifth round of
equity financing.
Last year, the company said it had landed $17.5 million through a fifth
round of funding. In a Securities and Exchange Commission filing from
February, Navini said it had landed $24.8 million of a $37.3 million
targeted raise.
It's unclear from the filings whether the $24.8 million is entirely new
money, or is simply an add-on to the $17.5 million it secured last year.
Navini did not respond to queries from the Dallas Business Journal.
In any event, the filing suggests Navini has landed at least $7.3
million in fresh cash through the re-opened round. Investors in the
company include Austin Ventures, Intel Capital, Lehman Brothers and
California's Sequoia Capital. The company has received a total of at
least $160.2 million since its inception in 2000, according to Dallas
Business Journal research.
The financing comes as Navini is vying for a bigger piece of the WiMax
market.
WiMax is a technical standard that provides wireless broadband services
over long distances.
Bob Larribeau, principal analyst in the San Francisco office of the
market-research firm TelecomView, says WiMax rollouts started last year.
"The market is just starting to take off now," he says. "I think we will
see significant growth over the next few years, the next two years in
particular."
In the United States, WiMax is being used to supply broadband service to
the roughly 15% of the population that can't receive cable or DSL.
Europe and other developed countries are seeing the same phenomenon.
In addition, Larribeau says, U.S. carriers like BellSouth are using
WiMax to target populations that don't have access to, or use, wireline
connections, such as college students.
"The main deployments we've seen in the last year or so is in developing
countries, such as Latin America and southeast and southwest Asia, where
they don't have wireline infrastructure," he says. In those cases, it's
faster and cheaper to supply phone and Internet services via WiMax than
wireline technologies.
Seeking big customers
Many of Navini's announced customers have historically been carriers in
foreign countries or their small brethren in this country. But a source
familiar with the situation, who asked for anonymity because of the
sensitivity of the matter, says Navini is in trials with unspecified,
big-name customers.
This person believes 2007 will be a key year for Navini. If, after all
is said and done, "they're not a player, that says something. If they
are a player, they could be worth an enormous amount of money," the
source says.
But becoming a player will be easier said than done.
"The challenge Navini has is the large (equipment) manufacturers are
committing to WiMax," says Larribeau of TelecomView. "That includes
Motorola, Nokia, Siemens, Alcatel Lucent and Samsung in Korea. So while
the market will grow large, these large providers have deep pockets and
will make the market quite competitive. Things will become more
difficult for companies like Navini. On the other hand, things will be
better (for the upstarts), because the whole market is growing."
The key for Navini, he adds, is positioning products carefully "so they
identify specific markets better than anybody else can, and go after
those markets aggressively. It's not rocket science. It's good business."
Larribeau estimates there are six to 12 upstarts like Navini vying for a
piece of the WiMax equipment market. "They're not all going to make it,"
he says. "But the market will be big enough to support the big guys, as
well as the leaders among the small companies."
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