| I been mulling over the whole valuation thing, in the optical sector. Quite obviously valuations are extremely high by any standard, but it seems that not only will institutions and retail investors buy shares at these prices, but so will companys, i.e. jdsu for isdl. Basically it comes down to this, if you have an optical technology thats use will be wide spread and critical to improving this high tech. global fiber infrastructure, then some company is going to pay current top dollar to own or partner with you. Why, because at 100% growth your little multi billion dollar start up company will be worth 10x's that in 2 1/2 years. More importantly, prospective corp. acquirers like Cisco that are in the market for start up optical co.s, won't survive in the current high tech optical arena unless they are providing customers with the best and fatest optical feed, the customer can afford to use. All this fast, broad, optical technology will generate the next level of productivity growth, and will facilitate new levels of information sharing. This will lead to the next level of high tech. innovations. In other words all these high tech improvements are critical to the customer's and provider's future growth and viability. Basically there is a race going on and either you create or acquire the technology you need to be a optical provider or your out of the running. Avanex, is in a position to have their technology used by every optical provider every where. If your a Cisco, Avanex could be a must buy, inorder to capture leadership and number one market share in Avanex's sector of the optical build out. As an investor I have tried to sit on the sidelines, but no longer, because I want to be on the optical train in some manner or fashion, because of the huge projected growth. The optical stocks are volatile and extremely valued, so they are not for everyone and one should only put a portion of risk capital at work. However there is some sense to all this high valuation madness though, that being, that having the ability to raise vast amounts of capital is critical to a company being able to quickly build a high tech optical global org. that will be capable of generating their end of the global optical build out. Therefore our investment of at risk capital will help to change how we humans interface with our world over night. I believe the positive aspects of this global build out serve a higher purpose, by driving the expanding opportunities for meaningful points of contact with the outside global community. Because of the valuations and volatility in these optical stocks, I both trade and hold them. Currently I am hoping Avnx will get a boost from the present optical conference, as its technology gains more visibility. |
