<<My concern on JDSU is that at some point the optical network gets built to the point of where it reasonably can be deployed. So, I am not sure about it long-term. Perhaps someone who understands better the optical market can address the risk that the market has a finite amount of gear that can reasonably be deployed.>>
I don't know that I understand the market better but I certainly hope your reasoning about the optical market being finite is wrong because JDSU is my largest holding and I also hold large positions in GLW and SDLI. A lot of people already own computers and many aren't that impressed with the need to upgrade to a newer, faster CPU but Intel isn't closing their doors. A lot of computers are now networked but Cisco still seems to be in business. I am hoping that not only is the optical market bigger and more dynamic in the future than we can now imagine but also that the management of these companies is good enough to continue to grow the companies even after all the long lines are in place. In fact the more I read about the complexities of the metro and "last mile" problems the more I believe that the long lines will prove to be the cheap and easy part of the network build out.
In the short run the market seems to be worried about the finances of some of the carriers and that may affect the suppliers of fiber and components but I don't think it changes the long term prospects for the optical market. A pull back in prices may offer a good entry point for anyone with a long term view point.
lightreading.com
SEPTEMBER 08, 2000
Telecom Scare Shakes Market
Have public markets soured on service providers? Does this herald a coming slowdown in
networking sales, as carriers are forced to halt their network buildouts for lack of funds?
These are questions haunting optical investors this week, in the wake of several disconcerting
events, including a financial restructuring (*) by Qwest Communications Corp. (NYSE:Q); an IPO
withdrawal by Broadview Networks Holdings Inc. (see Broadview Pulls IPO ); and news that the
alleged bankruptcy of Iaxis Ltd. had forced Ciena Corp. (Nasdaq: CIEN) to log a multimillion-dollar
write-off (see Ciena Spooks the Market ).
Indeed, Wall Street ran scared on Friday, fleeing anything that had to do with telecommunications
equipment. Large equipment providers such as Ciena, Cisco Systems Inc. (Nasdaq: CSCO),
Nortel Networks Corp. (NYSE/TSE: NT), Lucent Technologies Inc. (NYSE: LU), and Juniper
Networks Inc. (Nasdaq: JNPR) each lost between 2 percent and 8 percent of its value. Juniper
was the hardest hit, dropping 7.5 percent, or 16 points, to $199 in late afternoon trading.
But analysts warn investors not to be too quick to jump to conclusions. "There's an overall
perception that carriers are having problems getting financing. But that's not completely true,"
says Brian Etten, research associate at investment firm WR Hambrecht & Co..
>>>>>
(*)Qwest just acquired US West. They sold off Qwest's long distance business to focus on high growth areas such as wireless. The two companies overlap geographically so Qwest lays off several thousand workers after the merger. Is this a surprise? Does this constitute a restructuring forced by financial difficulties or an expected outcome after a merger? |
