Tellium IPO
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Holmes Report

Tellium IPO

Morrissey & Company helped Tellium capitalize on the exploding optical networking market, refocus its corporate positioning, refine its R&D pedigree, and clarify its product differentiation in a dynamic market.

Paul Holmes

Morrissey & Company helped Tellium capitalize on the exploding optical networking market, refocus its corporate positioning, refine its R&D pedigree, clarify its product differentiation in a dynamic market, and introduce executives as part of an aggressive media and analyst relations campaign.  In order to establish Tellium as a credible player in the industry, Morrissey & Company developed and implemented a fully integrated strategic communications plan, providing strategic positioning, media relations, investor relations, speaking opportunities and collateral material.  After the analyst road show, just days before Tellium’s IPO, Tellium was ready to go forward with its plans and become recognized as a plausible player in the industry. 
Challenge or Opportunity
In the exploding optical networking industry of 2000-2001, dozens of small companies were competing against well-known giants like Cisco and Nortel Networks.  Smaller, unknown optical networking companies were vying to provide light-speed Internet access, nearly unlimited capacity and dramatically improve Internet traffic flows.
Tellium is a builder of core optical switching technology – a critical component in the drive to bring optical networking to homes and businesses around the world.  Even though Tellium was a key player in the field of fiber optics, the company’s vast and strong background was not widely known. Tellium’s corporate story included a strong background in technology, including numerous patents, a renowned chief technology officer and co-founder, and strong roots in the telecommunications industry – but they were only telling a piece of this diverse list of strengths. 
While Tellium was in a hot space, few people were aware of who they are and what they do. Meanwhile, the company was competing with some well-known companies whose products and recent IPOs had garnered a great deal of attention in the previous year.  In a time when the economy seemed to be slowing, IPOs were at a near standstill, and there was a feeling of general malaise in the business environment, Morrissey & Company helped Tellium seize the opportunity to put its best foot forward and go through with its plans for an IPO in the spring of 2001.
Planning Process and Research
Morrissey & Company assessed the markets and previous IPO experiences among similar companies.  This research studied the activities other companies had executed pre- and post-IPO, and the success rate of such activities.  Morrissey & Company evaluated which reporters covered the telecommunications and IPO industries, and assessed their style of reporting and level of understanding of both topics.  Because Tellium’s IPO was pushed back from the fall of 2000 to the spring of 2001, continual updates and planning meetings took place.  The team examined the effects of remaining steadfast during an exceptionally long quiet period, and worked together to devise simple, yet routine, ways of communicating with external audiences to keep Tellium’s name in the forefront.  The goal: make certain that Tellium would be deemed a credible industry player when they became a public company. 

Strategic Approach and 5. Execution
Because of the conservative approach to the quiet period on Tellium’s part, the Morrissey & Company team worked carefully to research and pull together the best messages and continued “business as usual.” This activity included consistent outreach to key journalists and industry analysts to educate them about Tellium, telecommunications and fiber optics, and financial markets.  By developing these relationships over time, the team at Morrissey & Company developed ongoing, stable relationships with key business reporters at publications such as Investor’s Business Daily, and Dow Jones, just to name a few.  These reporters came to understand that Morrissey & Company’s outreach to them was not merely client-hype, but instead useful information related to a hot topic: telecommunications. 
Given the shaky stock market, and the fact that the telecommunications industry that was in the midst of one of the most dramatic nosedives in the markets’ history, Morrissey & Company took careful steps to avoid pumping Tellium as the next company to have a skyrocketing IPO.  Given the SEC's quiet period restrictions and a lack of major customer win announcements, Tellium was hamstrung, to some extent.  Thus, the strategy that Morrissey & Company developed focused on a few select key messages. 
Tellium had emerged as the number two player in its industry (optical networking) and was quickly narrowing the gap between itself and the leading player (Ciena). 
Tellium was not a throwback to the crazy days of 1999 and 2000, where companies went public with no revenues to speak of and no customers.  Instead, Tellium had significant revenues and major customers with $1 billion in contracts. 
At a time when major telecommunications giants like Nortel and Lucent were experiencing massive slowdowns, Tellium was a small niche player that was actually expanding.  At a time when industry giants were conducting layoffs of as many as 50,000 people at a time, small players such as Tellium that were actually holding on and even growing.
Tellium and Morrissey & Company took several steps post-IPO.  First, Tellium sponsored analyst studies that ultimately demonstrated that it was “closing the gap” between itself and the market leader in optical networking.  Such a study demonstrated that Tellium was not a pretender in a competitive industry, but rather a market leader and was close to overtaking the lead.  This document was a valuable tool for Morrissey & Company to share with key media contacts.  Second, Tellium continued to demonstrate strength financially, despite the slumping telecommunications market, avoiding layoffs and continuing to move forward on its initiatives.  Finally, Tellium continued its growth, despite the slumping industry, increasing its presence in the region.  These successes were discussed in meetings with major business media, at key conferences and trade shows, and with major analysts.
Summary of Results
Awareness of Tellium skyrocketed among both industry vertical media and major market business media just prior to the IPO, due to a successful IR road show and ongoing subtle outreach and commitment by Morrissey & Company to the business press.  The company’s IPO was one of the most successful of 2001.  On the first day of trading, May 19, 2001, Tellium’s stock shot up nearly 40 percent. The IPO was successful, raising $149 million. 
Major media outlets picked up on Tellium’s story, obviously after watching Tellium carefully throughout its extended quiet period.  Morrissey & Company has retained these relationships to this day, with reporters following Tellium and knowing that Tellium is available to comment on any aspect of the industry.  Morrissey & Company utilized the relationships it built with key journalists to garner substantial positive coverage surrounding Tellium’s IPO.  Tellium was named a “Rising Star 2001” by Deloitte and Touche, and a “Top 100 Company” by Upside magazine.  And, with speakers representing Tellium at over 80 speaking engagements throughout 2001, Tellium is undoubtedly viewed as a credible source in the industry.
In addition, Tellium continued to announce new clients and new successes throughout 2001.  Tellium’s earnings were been higher than expected in both Q2 and Q3.  While the stock price has declined, it has done so in a market tarnished by a declining economy.  Even so, Tellium is currently considered one of the leading core optical switch companies in North America, and is viewed as one of the companies “to watch” during the next few years.
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