JDSU mentioned, but about FO growth and SDL......
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SDL, Inc. (SDLI) 265 +5 13/16: The name has changed, but the news remains the same as SDL, Inc., is the latest fiber optic components supplier to beat earnings expectations and to report strong top-line growth. Following yesterday's close, SDL posted Q4 net income of $12.0 mln, or $0.32 per diluted share, which was seven cents ahead of estimates. Moreover, the EPS figure marked a 220% improvement from the year-ago period and a 45% sequential increase. Revenues jumped to a record $58.7 mln, up 92% on a year-over-year basis, and up 24% from the preceding quarter. The catalysts for the impressive results? You guessed it: strong demand for its products used in both terrestrial and undersea fiber optic systems. In fact, SDL acknowledged that it achieved 40% sequential growth in all three of its major markets, including metro/cable, and that over 50% of Q4 communications revenues came from products first introduced in 1999. SDL also noted that it received a contract extension until 2003 from Alcatel's Optronics unit. The boom in demand for fiber optic products is best reflected in the revenue increases as well as the company's stock price which is up 1025% from its 52-week low. The market's love affair with all things fiber optic has led to dramatic price increases in the stocks of many of SDL's peers such as JDS Uniphase (JDSU), E-Tek Dynamics (ETEK), and Corning (GLW). Accordingly, these stocks are not cheap by most standards, but the ever-increasing need for bandwidth expansion to meet the growing capabilities of the Internet, along with the prospect for continued consolidation in the group, have kept these stocks in hot demand. Of course, bullish backing from Wall Street analysts hasn't hurt either, and this morning, SDL is getting plenty of it. Among the firms making positive comments, raising estimates, or lifting price targets are Merrill Lynch, Salomon Smith Barney, CS First Boston, and USB Piper Jaffray. Fittingly, SDL Inc. is a winning standout in today's action, and although it will be subject to sizeable pullbacks every now and then given how far it has come, its earnings visibility and strong growth prospects should ensure that traders continue to view such corrections as a buying opportunity.-- PJO |
