Part 2.
Record for Nortel
Nortel, Lucent's biggest rival in North America, is
benefiting most from the race by phone companies such as Level 3 Communications Inc. and Colt Telecom Group Plc to build the most advanced fiber-optic networks. Shares of Brampton, Ontario-based Nortel have almost quadrupled this year.
Telecommunication-service providers need to double network
capacity every six to nine months to avoid bottlenecks that can delay a crucial file or hold up a phone call.
Much of their spending is going to equipment that relies on
laser systems to send information along the hair-thin trands of glass in fiber-optic cables. Nortel will increase its optical sales at least 70 percent this year to $5 billion or more.
The company is on track to boost 1999 earnings-per-share by
about 30 percent, more than it forecast earlier this year. In the fourth quarter, it's expected to earn 46 cents a share before acquisition costs, up from 36 cents.
``They've put themselves in the right place at the right
time for this whole data explosion,' said Jae Lee, an analyst at Minneapolis-based American Express Financial Advisors, whose $125 billion in stocks includes shares of Nortel.
Tellabs, whose main products link different streams of
traffic and restore lost calls in a fiber network, is poised to report a profit of 40 cents a share, up from 30 cents, on rising demand for its Titan line.
Filtering Down
Spending on fiber-optic equipment is filtering down to the
handful of companies that supply optical parts, making them among the fastest growing in any industry.
Nortel, Lucent and Alcatel SA are buying more of the optical
components they once made inhouse from JDS Uniphase, SDL Inc., E-Tek Dynamics Inc. and Corning Inc. Most of the suppliers, which make anything from lasers to filters to modules that boost the capacity of each fiber, are sold out.
San Jose, California-based JDS Uniphase will more than
double its fiscal second-quarter profit to 31 cents a share
before acquisition costs from 15 cents. SDL, whose stock has
climbed 10-fold this year, will boost profit to 25 cents a share from 10 cents.
``The demand is there -- the demand for components, the
demand for systems,' said Brandywine Asset Management Inc.
portfolio manager Alec Cutler, who runs $2 billion in technology and utility stocks in Wilmington, Delaware. ``It's almost a give-it-to-me-at-any-cost situation.'
Chipmakers
The boom |
