Monday, October 02, 2006 - Force10 spurns Nortel offer

Some observers estimated the potential deal, which had not been announced, to carry a price tag as high as $500 million. It was unclear Thursday whether San Jose, Calif.-based Force10 and Nortel were still talking. The two companies declined to comment.

Force10, which makes switching equipment that is faster and more compact than many competitors' products, has become one of the most watched young companies in Silicon Valley. Sources close to the company have said it is planning an IPO that would value it around $1 billion.

But Force10 still has not filed for an IPO. Susquehanna Financial Group LLLP analyst Joe Chiasson argued that the current market is unlikely to accept a $1 billion valuation for a company with annual revenue of around $120 million.

"Until they file for that IPO, anything is possible," said Chiasson, who speculated another suitor could approach Force10 with a $500 million offer, based on current deal valuations in the telecommunications equipment sector.

No comments: