I like {STLW}-STRATOS-LIGHTWAVE Remember that STLW does not only include all of METHAs highly prized optical businesses, but, also aquisitions like polycore and bandwidth
semiconductors and plants/offices in several countries.
STLW does not just rely on making one product,
they can build the whole subsystem. Companies
such as alcatel, agilent, EMC and cisco can buy
either single parts, like transievers or the whole
subsystem. THIS IS A TRUE OPTICAL INFRASTRUCTURE NETWORKING BACKBONE COMPANY
Methode(now STLW which includes all of methodes optical business) has been taking steps to make the
manufacture of its optoelectronic transceivers more
efficient. In October, the company purchased for $14
million the vertical-cavity surface-emitting-laser
(VCSEL) semiconductor-wafer-production operations
of Spire Corp.'s optoelectronics division.
That acquisition, renamed the Bandwidth Semiconductor subsidiary, is allowing Methode(STLW) to cost-effectively produce a key (and expensive) component of its transceiver product, which must currently be purchased from two or three outside vendors, according to a report from Merrill Lynch.
Methode(STLW) also added to its transceiver lineup through the April 1999 purchase of Methode Communication Modules, which targets the midrange of data communications performance (with transceivers operating in the range of 10 to 200 million data bits per second employing Ethernet and
Fast Ethernet communications protocols).
Methode recently introduced a number of products,
including a family of pluggable LC-Optical transceivers in September, a line of 3.3-V optical transceivers in November, and double-speed Fibre Channel versions of its family of optical transceivers in December.
The company's entry into the LC-connector market is
a key strategic move, since the new connector interface is being supported by a number of heavy-hitters, including IBM Microelectronics, Lucent Technologies' Microelectronics Group, MRV Communications, and Sumitomo Electric Lightwave. Designed by Bell Labs, the R&D arm of Lucent, the LC connector is a high-density optical device used for
single-mode and multimode fiber-optic applications in
both public and private networks. LC connectors
used in conjunction with SFF transceivers increases
port densities by up to 100% in fiber-optic
communications systems, and allows network-equipment engineers to design circuit boards and panel cutouts to accommodate copper connectors and fiber-optic ports.
Network-infrastructure companies are doing particularly well in the IPO market recently. For example, optical networking equipment maker ONI Systems (ONIS 115 1/2) has been on fire since its IPO on June 1. ONIS priced at $25, opened at $80 and has traded as high as $142. With 123.9 million shares outstanding, ONIS has fetched an incredible market cap of $14.3 billion. We believe Stratos is even more financially sound with a track record.
ONIS had only $3 million in revenue last year
(although $3.6 mln in MarQ) versus $71.8 million for
Stratos. Annualizing the March quarter, ONIS sports a
price-to-sales ratio of 993x. If Stratos achieves a p/s ratio of even 1/20th that of ONIS, that would price the shares at $55 |
