Can JDSU be increasing their forecasts, capacity and builds in the face of all this? For real? Believable real?
My most recent parallel is with the cell phone chippie guys, like CNXT, RFMD, LSI, etc.
Hey, we all know that long term all communication not done via fibre optics will be wireless, right? <g>
RFMD is a great, very recent, case study. They made the Top 10 Fortune fastest-growing companies, embarked on a major expansion, and told everybody the equivalent that business was ballistic when doubts were raised about the cell phone biz. (This is like a month or so ago. Look it up.)
Take a look at the RFMD chart. Hot, hot biz sector. Lotta buzz. Business ballistic for them even when carriers worldwide were seeing subscription and replacement sales rates flatten.
So, it is entirely believable that JDSU has this optimistic forecast and Dave Rickey reports business is ballistic. So did the wireless chippies. And the finished products ended up in warehouses around the world, the orders dried up, and it turned out things not so great.
What Ray, and I, and Rick, et. al. are trying to say is that long-term the F.O. biz is great. So is wireless (we'll, can't speak for Ray on that). The way these wacky stocks trade is parabolically upward until the first big hiccup hits. Why? Everything's according to planned perfection, and the long-term outlook is great.
What Rick and I learned is that there are some limits to the LTB&H mantra. We didn't realize that W.S. could take away 75% of what we thought we had in the blink of an eye, even when the long-term picture was so swell.
Wireless had a hiccup in 2000 versus expectations. Things will pick-up in 2ndH 2001, IMO. I can see the exact same thing happening in F.O. components with about a 6-9 month time delay (or roughly 3-6 months from now).
One also should consider, of the ultimate carriers who account for the bulk of F.O. purchases, how many around the world are simultaneously trying to juggle that with paying for 2.5G and 3G wireless and attendant license costs. I'm talking about the big overseas national telcos (e.g. NTT, BT, DT, France Telecom, C&W, Hutchison Whampoa, etc. etc.), and big N.A. players like the RBOC's, T, Sprint, Bell Canada, etc.
So, maybe they won't spend a bundle on circuit-switched gear, but a lot of capex conflict going on now between wireless and F.O. in the big carriers around the world. Something has to give, and the answer is a bit of both.
CLEC's and metro guys don't have this conflict; but they don't have very much money left to spend either.
All this will inexorably work its way through the supply chain. Just watch next quarter's warnings and guidance from the component guys. |
