The markets gave Camarillo-based Vitesse Semiconductor’s turnaround strategy a vote of confidence June 25 as the company sold out a stock offering that netted it $37.5 million.

The company closed an offering of 18.7 million shares at a price of $2.15 each for a gross of $40.2 million. That includes 2.4 million shares that the underwriters purchased by exercising an over-allotment option, a signal that demand for the shares was strong.

The offering comes as Vitesse has worked to reinvent itself over the past five years. With the sales of its older technology — mostly based around Sonnet, a voice protocol that drove  growth in the 1990s and early 2000s – in structural decline, the company has recast itself by adapting Ethernet technology for data and phone carriers.

Just last quarter, the company hit the turning point where its new products grew faster than its old products slipped, and it expects new product revenue to double this year to $30 million.

“The success of our public offering speaks volumes to the confidence our investors have in our strategy, products, team, and growth potential,” CEO Chris Gardner said in a press release.

The offering was also a definitive answer to investors who earlier in June had urged the company to sell itself. Seattle-based Columbia Pacific Advisors, which owned about 8.2 percent of Vitesse before the offering, sent the firm a letter asking to investigate whether selling the company would produce better shareholder value than taking its new products to market.

Columbia Pacific, which declined to comment for this story, said that its main concern was the debt that Vitesse had taken on. It had doubts about Vitesse’s ability repay a $7.9 million loan that comes due in February 2014 and a $55.8 million loan due in October of that year.

Chief Financial Officer Martin McDermut told the Business Times that the cash infusion from the offering should put worries about the company’s ability to meet debt payments to rest. Before the offering, the company had about $37 million in cash on its balance sheet, and the new capital essentially doubles that.  “We were OK, and this was additional powder to help us make sure we had the strength to deal with the debt maturity,” McDermut said.

Vitesse’s turnaround plan was to pivot the company to take advantage of data carriers’ shift toward Ethernet networks. That’s the same protocol used in office networks. It is fast and flexible, but back in 2008 it wasn’t well suited to carrier networks, which need to be able to host many different operators and thousands of network nodes.  “It wasn’t a technology that was applicable to public, wide-area networks,” Gardner told the Business Times

in an interview in early June. “This was a transition we saw coming in 2008. We had DNA in carrier level technology.”

As the company starts to see benefits from that bet, its officers and directors also bought into the offering. Exact figures for their purchases were not yet available at press time, but McDermut, the financial officer, said it was a sign of confidence in the C-suite.  “I put my money where my mouth is. I’m very excited about where we’re going and the opportunities in front of us now,” he said.

Vitesse’s shares rose 4.6 percent to $2.73 on June 25.  Needham & Co. acted as the sole book-running manager for the offering, and Craig-Hallum Capital Group and Imperial Capital acted as co-managers.