Recent weakness is due in large part because a major JDSU shareholder is unloading, and has been for quite a few days. According to my sources, it's the same guys who dumped during the S&P run-up.
Now, specific to SDL, for those who may be wondering what Mike might be telling his audiences over the next couple days, a few clues from the July 20 conference call:
Message 14082642
Guidance: 25% growth or better next quarter; gross margins the same or higher.
Manufacturing capacity goal is to increase facilities 5X over the next 12 to 18 months.[later explained this was for all mfg. facilities.] In British Columbia pump modules are still expanding --- will add both equipment and people, plus see efficiencies of new designs. have more orders than capacity.
Q: Gross margins, is there room for upside?
A: Yes, there's still room for upside. For example we only had PIRI for 4 wks in Q2.
Q: Demand vs. supply for 980 nm pumps and lasers?
A: Pump module --- demand is extremely high. We are turning away business. Ramping to meet demand. 5X is necessary. We can make a lot of chips. Not a problem in that area.
Q: Shipments in 2001?
A: Already shipping. Market will expand throughout the year.
Q: Was the 5X at PIRI? Could you explain. . .
A: In victoria it is 5X expansion, going on now; PIRI is also 5X expansion; Veritech is 5X, ahnd IOC and Queensgate, all 5X facility and productivity expansion.
>>>>
A few articles focusing on fiber optics demand:
alcatel.com
Where is bandwidth increasing the fastest today?
If you talk about capital deployed for backbone optical networks, I think the mainstream is still probably in the United States. But what we're probably going to see in 2000, 2001, is Asia coming up.
In terms of the backbone, in terms of big submarine architecture (in Asia), for three years we have done nothing, almost nothing. The perception we have today -- and it is not only a perception, it's the number of calls for bids -- there is something in the range of $8 billion in submarine systems that are in preparation in Asia today.
My feeling is that we will see in Asia the same kind of history as we've seen in Europe, for example, where we are currently building, 30, 40 pan-European networks. In Asia, you have the incumbent operators with their networks and we have the new carriers like Level3 and Qwest coming into Asia to build. And after that, they will have to connect back into the United States for access to Internet servers.
In the United States, I think we will see a change. The capital will be more into the regional metro and enterprise markets. It will be the opposite in Europe, because Europe still needs to equip the networks they are currently building.
Alcatel's expansion plans:
alcatel.com
Following its huge investment in 1999, effectively doubling the Alcatel Optronics facility in Nozay (Paris area, France) through its ambitious program called "Optronics 2000", Alcatel is now reinforcing its response to the marketplace demand by investing several USD million to implement a new facility in Plano, Texas. It will add 100 persons with very strong optoelectronic skills. The Plano engineers will work as a "virtual" team with their European colleagues to support the development of new products mainly in detectors ,optical interfaces and new opto services to be provided for customers. It represents an additional 3000m2 (30 000 sqf) production capacity.
[There's another expansion announcement, but I can't find it.]
Nortel's expansion plans:
nortelnetworks.com
TORONTO - Nortel Networks* [NYSE/TSE: NT], the global leader in Optical Internet solutions, will invest an additional US$260 million in its booming optical networking and components business. This follows Nortel Networks' US$400 million investment in optical networking announced in November 1999. These investments, and an expected tripling of production capacity in 2000, will accelerate the company's ability to answer explosive customer demand for its market-leading Optical Internet systems and components.
Corning's expansion plans:
corning.com
The company will initially invest approximately $80 million over the next 12 to18 months to double its production of fiber-based passive components, which are part of optical amplifiers used in communications networks. When fully operational, the plant will employ 440 people. Production is slated to begin by early-2001.
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If demand is peaking, as some would have us believe, I have to wonder why all these very bright companies are spending like there's no tomorrow to ramp capacity. Are we to assume they didn't study the market before committing to these numbers? Or can we assume those spreading fears don't understand the industry --- or, perhaps, understand it and have their own motives.
When the selling ends, I plan to use margin to add. But I'm still waiting. . .
Pat |
