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Monday, October 30, 2006

Opnext IPO Filing: Optical Components Carve-Out From Hitachi

Opnext Inc., a maker of optical components, has filed for an IPO given a $150 million nominal value for registration purposes. The Eatontown, N.J.-based supplier plans to trade on the Nasdaq under ticker symbol OPXT.

Goldman Sachs is serving as the lead underwriter; and co-managers are listed as J.P.Morgan, CIBC World Markets, Cowen & Co, and Jefferies. Hitachi is the company’s primary shareholder because it is the former parent. Clarity Partners and Cross-Atlantic Capital are also said to be holders. The actual timing of the IPO is not yet determined. The company is still losing money, but does more than $150 million in revenues.

More information on the company can be found at the website. There is also a great Q&A page giving more information at URL.

It is very hard to call Hitachi (HIT) a great backdoor play into this IPO, even though the street is rewarding new technology IPOs with high premiums. That is because the HIT ADR's give the company a net value of $19.5 Billion in the equivalent of Japanese Yen. That does NOT merit a trade just as a backdoor play. Others may treat HIT as undervalued or at a huge discount, but we are only evaluating this event in the sense of exploring HIT as a Backdoor Play. The current price on HIT ADR's is roughly $59.00, and it has a trading range of $55.74 to $76.57 over the last 52-weeks in the thinly traded ADR's.

Jon C. Ogg
October 30, 2006

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