Sources inform ''Globes'' that Israeli start-up CopperGate Communications Ltd. is due to become the first Israeli company to hold an IPO on Nasdaq in 2008. The IPO will reportedly be held at a company value of $400-600 million.
CopperGate was ranked eighth in the "Globes" most promising start-ups for 2007. The company will report a net profit of $10 million on $40-50 million revenue in 2007. The company will begin selecting investment banks for the IPO shortly.
CopperGate develops chipsets for high-speed IP data transmission over copper wire networks using the HomePNA3 standard. The company was founded in 2000 by David Baum and Israel Lifshitz. Its CEO is Gabli Hilevitz. CopperGate has raised $25 million, a fairly modest sum for a company in its field, from Challenge Fund - Etgar, Tamir Fishman Venture Capital (TASE: TFVC), Carmel Ventures, TechnoPlus Ventures Ltd. (TASE:TNPV), Motorola Ventures, and European Technology Ventures Capital Ltd.
CopperGate is about to become one of the most spectacular success stories in Israeli high-tech in recent years. The company has grown at a dizzying pace, and while its revenue currently comes from just one main customer - AT&T Inc. (NYSE:T) - this is expected to exceed $70 million in 2008. The company is also in advanced negotiations on contracts with a number of major triple-play providers.
Sources at CopperGate said that, in 2006, when the company had its first sales, it recorded $10 million revenue, which quintupled to $50 million this year.
CopperGate has already met all the leading investment banks in the underwriting sector, which have been enthusiastic and want to lead the IPO. They said that an IPO could be held during the first half of 2008. CooperGate is more cautious, and will pick a time that best suits it.
CopperGate is very well positioned thanks to the dramatic rise in demand for IPTV in parallel with the revolution in digital video. In the foreseeable future, modems for home use will have to be capable of transmitting data in far greater volumes. Some analysts predict speeds in excess of 50 megabytes per second (Mbps).
CopperGate supplies the exclusive HomePNA3 compliant product used by AT&T for IPTV. The company's solution was adopted as the standard in the field a year ago.
CopperGate's contract with AT&T, signed in the summer of 2006, was the springboard. It is now the only company able to provide chipsets for set-top boxes made by Motorola Corp. (NYSE:MOT) and Cisco Systems Inc. (Nasdaq:CSCO), both of which are AT&T's partner in IPTV service.
One of CopperGate's competitors is Entropic Communications Inc. (Nasdaq: ENTR), which developed products using a different standard, and which recently held its IPO on Nasdaq. Another, Intellon Corp. (Nasdaq: ITLN) whose technology is powerline-based, raised $45 million in its own IPO last week, with prices at the lower end of the company's target range.
Under the agreement with AT&T, CopperGate will earn revenue on every sale of digital services, and the company believes that over the next few years the revenue from the collaboration with the telecommunications giant, could reach hundreds of millions of dollars.
Published by Globes [online], Israel business news - www.globes.co.il - on December 19, 2007
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