When I look at a chart of JDSU, it appears that the stock took off in Sep of '98, and the stock accelerated when
Gilder put out a report early this year. We need to hear from some of the followers of this stock to fill us in on
where the entry points should have been for us, and how we would have known them at the time.
A couple of points, Gilder focused on Uniphase in May of 98 with the title "The Intel of the Telecosm", this reflected his opinion of the future of Uniphase's technology to increase the bandwidth on existing fiber-optic systems allowing additional data to be transmitted at the fraction of the cost. The discontinuous innovation was the erbium doped fiber amplifier, which finally crossed the chasm when MCI was convinced to try this technology on their fiber backbone.
Uniphase made the laser to send the signals and JDS Fitel, a Canadian based company (really!), created the majority of the filters (gratings) to extract the individual wavelengths of light and direct them to the appropriate segments along the circuit. JDS's product had also crossed the chasm and was a discontinuous innovation to complement the amplifier of Uniphase's. Their earnings were increasing at 100% per annum, very gorilla like earnings. When JDS and Uniphase decided to merge, that created the ultimate King/Gorilla. As the two most important technologies at the time were being melded together within one company to bring economies to scale and to minimizes compatibility problems. This being announced back in November I think, with the transaction being completed in June/July, creating the juggernaut we have now.
In October of 1998, everything in technology was going down the tube from a valuation standpoint because of hedge/LTCM fiasco where Greenspan actually saved us from disaster there. At the time Cisco even lost 50% of its value over the short stretch. And JDS was being downgraded by some Canadian mutual company (heaven forbid owning that fund). The price was hovering between $13-15 Canadian. After consolidation with the merger and subsequent split $15-->$370, that is 2400% returns in just over one year.
An entry time could have been when JDS and Uniphase announced their merger. If I had known about this thread in October 1998, I would have probably bought and held and be able to retire, but what was I doing, trying to figure how to get rich quick with a bunch of shiny pebbles.
Hope this helps someone.
Later |
