What is the next Intc/MSFT? Can you catch up Intc/MSFT in its infancy? Recently, I had an opportunity to participate a market reserach project for DWDM-Dense Wavelength Division Multiplexing components. I really got excited. I believe that the DWDM is just like semiconductor revolution. The most exciting thing is that it is still in its infancy. Here are some high lights for the research:
1). DWDM component market started to jump in 1996, when the optical fiber amplifiers was commericiallized. DWDM and optical fiber amplifiers enable ALL-OPTICAL Network. The all -optical network would be ultra-fast. It is the next generation network.
2). Internet doubles capacity of network every 100 days. There is no way for carriers to lay new optical fiber lines to meet the demand. Only DWDM can increase the capacity by 100-1000 fold without laying the new lines. DWDM systems are leading the way for a telecommunication revolution, driven by the internet revolution.
3). The market for DWDM components will grow from 2.2 Billions this year to 13.9 Billions in 2004 and will continue to grow after 2004.
4). North American counts 80% of DWDM market share. Asia and Europe are not coming yet. DWDM is still in its infancy. Even in the u.s., the DWDM systems are concentrated in Long distance fiber lines. Now it is the time to deploy them in cities around the country.
5). All-optical Network will need huge amount of fiberoptic passive components. These passive devices will grow at 65 % until 2008. For example, ADD/Drop components will grow from 30 Millions this year to 6.9 Billions in 2007.
6). GLW has 80% of Optical Fiber Amplifier marekt share. The fiber amplifier will count 15% of DWDM Component market. As a result, GLW will have more than 2B revenue for fiber amplifier in 2004.
Key players for DWDM components
JDSU, ETEK, OCLI, NT, LU, Dicon( private),ACTEL, glw.
I prefer to play pure leading DWDM component companies like
JDSU, ETEK, OCLI and GLW.
NT and LU,ACTEL are too big, DWDM may be a small portion of their revenue. GLW is really under valued. If they spin off their fiberoptic operation, the stock shall double easily. ETEK is a good one, but insiders hold too many shares. They are dumping the shares now. But it should be short lived. I would buy ETEK whenever insider dumping the shares.
I decided to ride this telecommunication revolution. It is still in its infancy. Buy these stocks and hold for 5 years, the return shall be huge. Let's invest in DWDM component companies and be rich in 5 years!
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