JDSU--Shares of Fiber-Optic Suppliers Return to Favor
OTTAWA (Reuters) - Fiber-optic suppliers staged a powerful stock market rebound on Tuesday, led by high-flying JDS Uniphase Corp. (Toronto:JDU.TO - news) (NasdaqNM:JDSU - news) and drawing investors back to stocks that have been hard hit in recent sessions.
``I think people are saying 'Wow. It's not as bad as we thought it was, and these stocks have gotten killed, so let's just come in and buy the winners','' said Arun Veerappan, a senior technology analyst with Robertson Stephens.
Shares in a host of companies selling telecoms network equipment and components have slumped recently as investors speculated there would be a spending slowdown by major telecoms companies.
``The Nasdaq has been pummeled, we've taken big corrections, it's 12 percent off its high,'' Veerappan said.
``Your risk-reward profile is all of a sudden a lot better. If the stocks can go down 10 points as a bottom, they probably can go up 30 to 40 points -- I guess that's the rationale that investors are using.''
JDS Uniphase, the world's No. 1 supplier of components and modules that boost the speed and capacity of fiber-optic networks, returned to favor on Tuesday. But the stock, which lost more than 5 percent on Monday on the Toronto Stock Exchange, is still well off this year's high of C$219.00.
Shares shot up more nearly 9 percent on Toronto to end at C$159.00, a gain of C$12.55. On Nasdaq, they gained $10-2/16 to close at $107-15/16.
A similar performance was staged by a number of other companies that supply fiber-optic equipment.
On Nasdaq, optical system and switch developer CIENA Corp. (NasdaqNM:CIEN - news) gained $7-1/4 to end at $110-3/4, optical network equipment company Sycamore Networks (NasdaqNM:SCMR - news) picked up $5-15/16 to close at $106-9/16, and all-optical networking developer Corvis Corp. (NasdaqNM:CORV - news) gained $5-3/16 to close at $77-15/16.
``With respect to the optical space, especially on the component side, it remains dramatically capacity constrained,'' said Veerappan.
``Every customer is hungry for product and JDS Uniphase is leading the charge in terms of putting more capacity out to the customers and that's why you're seeing its stock rebound.''
JDS Uniphase told analysts recently that its expansion plan, to boost production by four times over each 18-month period, is on track.
Corning Inc. (NYSE:GLW - news), best known for the glass fibers that are at the heart of fiber-optics networks, gained nearly 6 percent on the New York Stock Exchange (news - web sites), adding $16-15/16 to end at $307.00. |
