Intellon Plugs Into IPO Market

Light Reading
http://www.lightreading.com/document.asp?doc_id=130193&site=cdn
7/24/2007, Craig Matsumoto, West Coast Editor, Light Reading

Amid a hot digital-home market but facing a horde of present and future competitors, not to mention continued losses, Intellon Corp. thinks it's ready to go public.

Intellon, which helped launch the first HomePlug Powerline Alliance standard, filed its S-1 form with the Securities and Exchange Commission (SEC) on July 12 for a planned IPO. (See Intellon Files for IPO.)

Details such as a price range haven't been determined yet, but the S-1 does categorize the offering's size as less than $100 million.

Intellon's chips transmit data over in-home electrical lines via the HomePlug standards. The company's most visible market these days is IPTV, of course, where an Intellon-powered home gateway can shunt video to TV screens and PCs all over the house. At least 35 service providers have installed Intellon's chips in subscriber homes, according to the filing.

Power lines aren't the cleanest way to send a signal, electrically speaking, but they are available -- every residence that wants IPTV will have them.

So, how do the numbers look? Intellon is in the midst of losses -- $13.1 million worth in 2006, on revenues of $33.7 million, according to the SEC filing. On the plus side, that's the smallest loss and largest revenue figure during the past three years, as shown in the following table:

Intellon has raised $76 million since 2003, according to the S-1. The latest round, worth $18 million, was closed in December 2006, featuring big names like Comcast Corp. (Nasdaq: CMCSA, CMCSK), Intel Corp. (Nasdaq: INTC - message board), and Motorola Inc. (NYSE: MOT - message board). (See Intellon Gets $18M From Moto, Comcast.)

The company had $23 million in cash and equivalents as of March 31, according to the S-1.

Intellon sells to at least one carrier directly -- EchoStar Communications Corp. -- but most of its direct customers are distributors, OEMs, and original design manufacturers. For 2006, its top customers were an OEM called Develo AG and distributor Lumax International Corp., representing 19 percent and 17 percent of revenues, respectively.

One problem with Intellon's market of choice is that it's rife with competiton. Established chip firms, Conexant Systems Inc. (Nasdaq: CNXT - message board) and Maxim Integrated Products Inc. (Nasdaq: MXIM - message board), also build HomePlug chips. And powerline chips that don't adhere to HomePlug are available from Design of Systems on Silicon (DS2) and Panasonic .

Startups are continuing to crowd into powerline networking, too. Intellon's S-1 lists up-and-comers SiConnect Ltd. , Spidcom Technologies SA , and Xeline Co. Ltd. , based in England, France, and Korea, respectively.

On top of that, you've got other chip makers that don't think power lines are the best way to build a home network. Specifically, Entropic Communications Inc. has been championing the Multimedia over Coax Alliance (MoCA) standard for using cable co-ax as the in-home medium. Wireless could be in that mix, too, as Entropic branched out in April by merging with RF Silicon, a vendor of TV tuners and WiMax chips. (See Presto! Entropic to Merge With RF Magic.)

In an interesting war of numbers, Intellon and Entropic are spewing figures to prove their technologies are getting accepted. Intellon recently announced it has shipped 10 million of its HomePlug chips, while Entropic has gotten to just 5 million of its MOCA chips -- but keep in mind, HomePlug had a few years headstart on MOCA. (See Intellon Marks 10M and Entropic Ships 5M.)

Intellon investors Comcast, Intel, and Motorola have stakes in Entropic, too. Other Entropic backers include EchoStar, Cox Communications Inc. , Time Warner Inc. (NYSE: TWX - message board), and Verizon Communications Inc. (NYSE: VZ - message board), along with other big technology names and several VC firms.