Cramer's thesis is that as soon as the component manufacturers can meet demand, they will get killed. Or rather, they will get killed on the first glimmer of a feeling that they will start meeting demand sometime in the foreseeable future. His contention is that this is what is going to happen to JDSU, GLW -- and that JDSU blowing away earnings now means nothing because they will be the last to know when capacity starts to meet demand. It would be the WCOM, T etc that talk lower capital expenditures first, then the LU, NT's of the world would start to hurt, then the SCMR, CIENs will find out, and JDSU, GLW etc will find out last while they're still building capacity. He made an analogy with hard disk component manufacturers who found out way after Quantum etc died that the hard drive business was bad (supply met demand).
I actually sort of believe him, there really isn't that much business at the core -- there is a lot more at the edge of the network. So maybe JDSU, GLW will be happy to supply to the edge boxes and won't quite tank. But CIEN, SCMR, NT, LU . . .
Thankfully I make internet edge routers instead of stuff for the tiny core market. Can we start focusing on the internet edge please -- think positive vibes about the edge of the network, think gobs of bandwidth to the paying customer, think cool quality of service, think on the edge! <g>
-A |
