Cyan Inc., a Petaluma networking equipment company whose founders launched some of the most successful startups in Telecom Valley, disclosed plans Thursday to sell up to $75 million in stock in an initial public offering.
The IPO is the second announced in two days by a Sonoma County company. Truett-Hurst, a Healdsburg wine company, announced plans Wednesday to go public and sell up to $42 million in stock in its IPO.
"Having two in 24 hours shows there's more confidence in the economy and prospects than we've seen in seven years or so," said Ben Stone, executive director of the Sonoma County Economic Development Board.
"It's important for Telecom Valley," he said. "It's showing we have a tech sector that's competitive at a national level for investment."
Cyan president Mike Hatfield, who co-founded the company in 2006, helped build some of the most valuable and durable tech startups in an area of Sonoma County that came to be known as Telecom Valley during the 1990s.
An early team member at Advanced Fibre Communications, Hatfield left the Petaluma company after its IPO and helped to launch Cerent. The 2-year-old Petaluma startup was acquired in 1999 by Cisco for $7.3 billion -- the biggest buyout in Sonoma County history -- in a deal that made half of its 400 employees millionaires, at least on paper before tech stocks crashed the following year. Two months after the Cerent sale, he helped start Calix, which went public in 2010 with an $82 million IPO.
"This is just one more example of Mike's leadership, and his track record being recognized by the larger financial sector and investors," Stone said.
Hatfield and other company officials were unable to comment Thursday because of laws regulating stock sales, said Bonnie McBride, vice president of investor relations for Cyan.
Hatfield stepped down as CEO last May, when veteran Mark Floyd was brought in to lead the company, but continues to oversee market strategy and product development. The company sells software and equipment that help telephone companies, data centers and private network operators reduce the cost of moving data quickly across their networks.
"For the last three years, it's been clear that Cyan has been the top private manufacturer in telecom," said Michael Howard, principal analyst at Infonetics Research, a Silicon Valley consulting firm that tracks the telecom industry. "This company is yet another hit by Mike Hatfield and his friends. He's just very good at spotting the next change in networks where you need to combine a number of technologies in a product."
Sales have nearly doubled over the past two years, from $23.5 million in 2010 to $40.4 million last year, according to a registration statement filed with the Securities and Exchange Commission. But the company has lost nearly $49 million over the past three years, according to the SEC filing.
Cyan hopes to raise a maximum of $75 million in its IPO, according to the SEC filing. It intends to use the funds for working capital and possible acquisitions, the filing said. The number of shares to be offered and the price range for the shares have not yet been determined.
Over the past four years, the company has grown from 39 employees to 219 at the end of 2012. It plans to "substantially increase our head count across all functions in 2013," according to the SEC filing.
Read all of the PD's fire coverage here