x,
this should answer some of your Qs:
investors.com
OPTICAL COATING LABORATORY INC. Santa Rosa, California Look Bright For Color-Changing Pigments
Date: 3/19/99
Author: Clifton Linton
Nascar drivers are known by their racecars' paint jobs. Current Nascar champion Jeff Gordon drives a rainbow-colored car. He took the concept to another level at an exhibition race last May, with a specially painted car that changed colors as he circled the track.
The paint scheme was cooked up by Gordon's sponsor, DuPont Co., to showcase a new line of color-shifting auto paints it's developing. But DuPont couldn't have done it without the help of Optical Coating Laboratory Inc.
The company makes an optically variable pigment that causes paint to change color as light hits it from different angles. The Treasury Department uses a higher grade of the pigment to print its new $20 bills.
The pigment is one of Optical Coating's two fastest-growing product lines. The other is a filter for phone signal switching. The products represent a new commercial outlook for the company, long known as a defense contractor.
'This is a company that has made tremendous achievements . . . in optical technology and in vacuum-based film coating,' said analyst Joe Arsenio of Hambrecht & Quist. 'But until now, (it) tended to work toward scientific progress (rather) than the bottom line.'
In 1997, Optical Coating revamped its management and adopted a more commercial focus. While sales from its core aerospace and instrumentation unit have remained flat, its new pigment and filter businesses have boosted sales and reversed declining earnings.
In the Jan. 31 first quarter, earnings climbed 85% to 24 cents a share. Sales rose 31% to $69.8 million.
Telecom filters, Optical Coating's hottest product, work with wavelength division multiplexing (WDM) systems to expand the capacity of high-speed, fiber- optic lines.
Growing use of the Internet is overloading these lines. To allow for more growth, telecoms are trying to send multiple signals over the same fiber using different colored lasers. A red laser would send data, for instance, while a green laser sends voice signals.
Such a split would, in effect, double each fiber's capacity. Optical Coating's filters can split fiber-optic cables into 40 channels.
The company sells its filters through a joint venture with leading telecom equipment maker JDS Fitel . An announced $6.1 billion merger between JDS and Uniphase Corp. should create more opportunities for Optical Coating, says analyst Kathy Bullock of A.G. Edwards & Sons.
Uniphase makes optical transmitters, modulators and translators, equipment that complements JDS' product line. 'There is potential for (Optical Coating) to . . . expand its product offering to accommodate Uniphase,' Bullock said.
Telecom equipment accounted for $74 million, or 29% of the company's 1998 revenue. Sales of such products should rise 45% in 1999, Bullock says.
And there's plenty of room for further growth. The total market for WDM equipment reached $200 million in 1998 and should top $400 million by 2002, says CFO Craig Collins.
Optical Coating's telecom unit also makes covers for photovoltaic cells used on telecom satellites. Sales have been flat recently, but could rise if launches increase. Demand for more telecom capacity is driving satellite launches.
Sales of the company's pigment products rose 18% to $43 million in 1998. Bullock expects 38% growth this year.
Optical Coating boosted its presence in the optically variable pigment market in December when it paid $30 million for the remaining 40% of Flex Products Inc. that it didn't already own. Flex makes special pigments used in anti-counterfeiting inks and energy-conserving films applied to glass.
Optically variable pigments are used on 60 currencies, including the euro and U.S. $20, $50 and $100 bills. The ink is so valuable that the Treasury posts armed guards around its supply.
The company sees uses for the pigment beyond currency. Companies could use it to thwart counterfeiters. It also could be used on cars, snow skis, cellular phones, athletic shoes and pagers, Collins says. Automakers are testing the pigment on some models.
The fact that die-cast models of driver Gordon's racecar quickly sold out hints at the potential demand for such visually appealing items, says Kymberly Brantigan, a spokeswoman for Gordon.
But at $300 a gallon, the paint is currently too expensive for automakers. Flex is trying to cut that to under $150 by improving its manufacturing process and expanding plant capacity.
Optical Coating also makes anti-glare coatings for office equipment.
Sensing a downturn in the office products industry, the company sold its MMG division, which made coated glass and mirrors for copiers, cameras and scanners. But it still sells Glare Guard, an anti-glare coating for computer monitors, flat panels and projection displays.
Because it makes such specialized products, Optical Coating faces few rivals. It's the sole supplier of optically variable pigments and one of only a handful of telecom filter vendors.
Analysts expect the company's earnings to rise 33% to $1.28 a share in fiscal 1999 and 22% to $1.56 in 2000, First Call says. Optical Coating trades as OCLI near 38.
--------------------------------------------------------------------------------
(C) Copyright 1999 Investors Business Daily, Inc.
Metadata: DD OCLI UNPH I/9900 I/3811 I/4890 E/IBD E/SN1 E/NAM E/NAM1 |
