as always, matter of opinion. you're leaving out the other half of my equation. i'm comparing growth with earnings multiples. sdli grows 3 times as fast as nt, but you pay 10 times as much per $ of earnings. earnings are ultimately what it's all about, and sooner or later that reality will affect price. 500 times earnings demands that they keep on growing at 100% a year, that the scenario remains perfect.
sdli manufactures components, which are in tremendous demand, with only 2 big suppliers: jdsu and sdli. they have only one arrow in their quiver: components. nt also manufactures components, but they provide a dozen other optical services and products: optical, wireless, access and other IP services, and, coming up, soliton transmissions, which will carry transmissions 3000 miles without boosters every 600 miles - and that's a big part of jdsu and sdli's business. furukawa this year sold $2billion worth of jdsu, to use the money to go into optical components in the US. Furukawa funded Jos D Strauss, the JDS of JDSU. They know everything JDSU knows, and they have tons of optical component patents. I think that in 5 years components will be commodities, and nt's components costs will fall; but jdsu and sdli will be affected. Maybe that's why CEO kevin kalkhoven is leaving jdsu and selling large amounts of his stock.
I don't mean the end of the world is coming, just that with those imponderables about components sdli not worth 500 times earnings for me. |
