Must Read article from:"light Reading"
Market Continues Its Tumble
PREVIOUS NEWS ANALYSIS SEPTEMBER 11, 2000
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Is the optical party over? Not according to Wall Street
experts, who continue to predict relief for the optical
sector, despite the fact that stock prices of component
and equipment vendors extended their losses in trading
on Monday.
On Monday, several systems vendors, including Ciena
Corp. (Nasdaq: CIEN), Cisco Systems Inc. (Nasdaq:
CSCO), and Juniper Networks Inc. (Nasdaq: JNPR),
continued to take a beating.
Cisco's stock dropped 4 percent, to close at 61.31;
Ciena lost 15.63 (7.83 percent) to close at 184; and
Juniper lost 14.56 points, closing at 183.06. And while
many optical component stocks -- embracing
manufacturers of chips, subsystems, lasers, and other
optical components -- regained some of Friday's losses
early in the day, by day's end they too were feeling the
undertow.
Particularly hard hit were Broadcom Corp. (Nasdaq:
BRCM), which closed at 224.13, down 2.40 percent; JDS
Uniphase Inc. (Nasdaq: JDSU, closing at 109.75, down
almost 4 percent; PMC Sierra (Nasdaq: PMCS), closing
at 208.50, down 2.97 percent; and Vitesse
Semiconductor Corp. (Nasdaq: VTSS), closing at 80.56,
down 5.84 percent.
The optical bulls, however, continued to defend the
sector, describing the growing stock market fear as
general rather than specific to the optical community.
"I believe this was a temporary setback only," says
Robert M. Montague, analyst at Morgan Keegan &
Company Inc.. "Nasdaq went down hard over the past
week or so. It's not specific to components."
"People are realizing that demand for bandwidth isn't
dwindling," said Alan Bezoza, research analyst with CIBC
World Markets. "And while there's cause for concern, the
sky's not falling."
"We're not concerned," said Mark Langley, a senior
research analyst with Epoch Partners. "People have
been talking about a bandwidth glut for two years now
and it hasn't materialized. A lot of this is seasonal
jitteriness. People get back from vacation in August and
start getting nervous. The same thing happened last
year."
One possible indication that the market weakness has
little to do with the optical market is the serious dip in the
chip sector. The chip losses originally were attributed in
large part to several analysts downgrading the stocks of
Applied Micro Circuits Corp. (Nasdaq: AMCC) and Intel
Corp. (Nasdaq: INTC) after the U.S. Labor Day
weekend, and these downgrades were associated with
the PC industry, not the networking industry.
(PaineWebber Inc. changed its AMCC rating from Buy to
Attractive; U.S. Bancorp Piper Jaffray changed its Intel
rating from Strong Buy to Buy.) At closing, AMCC's stock
price was 182.75, down 1.65 percent; and Intel closed at
64.69, down 1.05 percent.
-- Mary Jander, senior editor, Light Reading
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