Meru Networks late Friday filed for an initial public offering (IPO) worth up to $86.25 million in common stock.
According to the company's Form S-1 filed with the Securities & Exchange Commission last week, Meru will use proceeds for working capital and expansion of sales, marketing and research and development efforts, as well as capital expenditures.
The IPO filing is a big step for the wireless LAN company, which in the past month retooled its executive team and added a number of new faces, including Senior Vice President of Marketing Ram Appalaraju and Senior Vice President of Worldwide Sales Glenn Cross. Meru, which was founded in 2002, has been eyed for IPO potential for at least two years, following the successful IPO by rival Aruba Networks in March 2007.
According to its S-1, Meru reported $50.24 million in revenue for the nine month period ending in September 2009, with a net loss of $9.43 million -- significantly better than the net $24.6 million loss from a year earlier. Op-ex losses have been significantly reined in from a year ago, according to the S-1 filing, and Meru's costs of sales have gradually decreased.
In the interim, Meru has continued to win praise for its 802.11n wireless gear and other highlights of its portfolio, including the recently debuted Service Assurance Manager platform.
Earlier this year, Meru secured $30 million in private equity funding led by New York's Vision Capital Advisors. Other backers for Sunnyvale, Calif.-based Meru include Clearstone Venture Partners, NeoCarta Ventures, The D.E. Shaw Group, Evercore Partners, BlueStream Ventures, Monitor Ventures and Tenaya Capital.
A spokesperson for Meru declined to comment on the filing but e-mailed a press release from Meru stating that the number of shares to be offered and the price range for the offering had not yet been determined. Bank of America-Merrill Lynch will be the primary underwriter for Meru's offering, and Baird, Cowen and Company, JP Securities LLC and ThinkEquity LLC will be the co-managers.
In the S-1 filing, Meru suggests that rival wireless solutions have unreliable access to and less-than-optimized support for business applications, weak performance when compared to wired networks, and high cap-ex and op-ex costs.
"We believe that other widely-deployed wireless network solutions are fundamentally similar to one another in their architectures, and that they struggle to deliver the performance, reliability and predictability of wired networks at scale, and to maximize the cost efficiencies that wireless networking has potential to provide," writes Meru.
Meru further notes that it needs to build awareness of its brand -- a problem some of its solution providers note -- and will focus on markets like education, health care, hospitality and retail that have high growth potential for 802.11n wireless infrastructure.
The company also said it will look to expand relationships with VARs and distributors. The company's principal distribution partners remain Westcon Group and ScanSource's Catalyst Telecom unit, and it has resell relationships with Avaya and Brocade-owned Foundry Networks. Westcon is Meru's largest distribution partner at 19 percent of products and services, according to Meru's S-1.
Meru's executive shuffling has also meant some transitions out of the company. Former Meru vice president of North American sales Bob Bruce was last week announced as the new channel chief at Aruba.
