It just keeps getting BETTER!!!
DJ ADC Telecom Sees-2: May Revise Fiscal Yr EPS Upward>ADCT
By Johnathan Burns
ATLANTA (Dow Jones)-- ADC Telecommunications Inc. (ADCT) expects sales of its fiber optical components to double year-over-year in fiscal 2000 and 2001, Chief Executive Bill Cadogan said Thursday.
In an interview with Dow Jones Newswires at Supercomm 2000 in Atlanta, Cadogan also said strong sales across all product lines "provide opportunity for further upward revisions" in year-end per-share earnings.
"Certainly, demand continues to be very strong," he said. "We've got several products where demand is far outstripping capacity."
Last month, ADC reported fiscal second-quarter earnings of 29 cents a share, compared with First Call's consensus estimate of 26 cents. The company's emerging fiber optic components and systems business accounted for $100 million of the total $709 million in revenue. Optic related sales grew 115% during the quarter.
Analysts estimate the company will post full-year 2000 earnings of $1.11 a share. The company earned, excluding charges, $1.34 a share on sales of $1.9 billion in fiscal 1999. Including charges, it earned 57 cents a share.
Cadogan said the company will evaluate earnings projections at the middle of the quarter.
ADC is expanding its manufacturing space by 1 million square feet to meet demand. Cadogan said capital spending by service providers for telecommunications equipment is up 40% from a year ago through the first half of the year.
"I equate this to what times must have been like in the gold rush of the 1840s," he said.
Cadogan said ADC is now shipping 980nm pump laser diode and module to two unnamed customers.
"(The laser) is one of the basic building blocks of optical networking," he said. "The lasers are testing out quite well. The (light power) puts ADC at the top of the industry. Customers are willing to pay more for higher power."
Cadogan said the company should be demonstrating a micro-mechanical optical switching product by the end of the year. The device is designed to move telecommunications traffic through networks as lightwaves, or all-optical.
All-optical networks are the most desired because of efficiency and speed.
"In general, the year 2001 is when most of those products will get to the market," Cadogan said. "True optical networking is the next frontier."
Other optical systems companies, such as Lucent Technologies Inc. (LU), are developing similar switching devices. Both Lucent's and ADC's device would use tiny mirrors to re-direct lightwaves. A product being tested by Agilent Technologies Inc. (A) uses a bubble-jet design.
Cadogan said ADC also sees strong sales prospects in the multipoint multichannel distribution service market. By the end of June, the company's products will be under testing in Boston as WorldCom Inc. (WCOM) conducts trials on the fixed wireless data and Internet services.
"That part has really started to heat up," he said. "There's enough interest there that it will clearly rival digital subscriber lines and cable modems."
And speaking of cable, ADC hopes to become a larger supplier of cable telephony products to AT&T Corp. (T) whose recently approved merger with MediaOne Group Inc. (UMG) makes it the largest cable service provider in the country.
"We do expect to get a significant piece of that business," Cadogan said.
ADC recently won a contract to sell cable-telephony equipment to an AT&T affiliate.
-By Jonathan Burns, Dow Jones Newswires; 201-938-2020
(END) DOW JONES NEWS 06-08-00
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