Q&A With Gerry Fine, VP & GM Of Corning Photonic Technologies: Why Corning is Hot
Fiber Optics News
From dishware to dishing out fiber optics products, Corning Inc. [GLW] of Corning, N.Y., is never satisfied with remaining stagnant. According to Gerry Fine, Ph.D., vice president and general manager for Corning Photonic Technologies, if there is a need out there, Corning will fill it.
Fine, who joined Corning in 1985 as a research scientist in R&D, has held management positions for Corning Asahi Video Products and was deputy general manager-Corning Advanced Display Products. He recently spoke with FON to discuss the company's plans for future product and service offerings:
FON: What factors do you think will spur or stifle the growth of the fiber optics industry and how will Corning address those issues?
Fine: The thing that will spur the industry the most is if the industry causes the cost of bandwidth to continually decline. And innovation that drives down the cost of bandwidth -- that can be either product innovation or process innovation -- is a good thing.
At Corning, we focus on two fundamental things. We are developing products that drive down the cost of bandwidth for our customers' customers. So that would be examples of new optical fibers that eliminate the need for expensive componentry or Raman amplifiers that cause signals to go farther without electronic regeneration. Those are examples of product innovation.
For process innovation, those are things like automating our manufacturing processes to drive down manufacturing costs and allowing us to offer lower prices to our customers and better products to our customers.
We believe that if we drive bandwidth cost down, we create a virtuous circle. As the cost of bits goes down, the number of new applications grows, creating more demand for bits, creating the need to drive it down even lower.
FON: What will your customers need from you six months to a year from now?
Fine: In the near term, they will need components and modules and optical fiber, which cause optical networks to be faster, longer, wider and smarter.
So by faster, where they used to use 2.5 gigabits, they are using 10 gigabits and some will use 40 gigabits or more. Longer would be ultra longhaul systems that require the use of electronic regeneration every 3,000 kilometers as opposed to every 600 kilometers. Wider, we mean using the full spectrum available to an optical fiber to put signals down. And by smarter, we mean things that can switch our route wavelengths in a network as opposed to point- to-point systems.
FON: What is your competition doing now that could affect you?
Fine: We have lots of good competitors. This is an industry where the best and the brightest are participating and almost everybody is innovating to make networks go faster, wider, longer and smarter. In general, every one is innovating every day and no one can come up with every solution. Our competitors have ideas we don't have and we have ideas they don't have.
FON: Can you explain the significance of Corning's recent acquisition of Pirelli's optical component and devices business in Milan, Italy?
Fine: Our customers want us to be a full-line supplier of components and modules that enable optical networking. Corning has had a traditionally strong position in optical fiber, amplifiers, dispersion compensation devices, and recently acquired a strong position in multiplexing and demultiplexing. We still have product gaps in the area of transmission and receiving.
We had some capability in Corning Lasertron, where Pirelli gives us more capability in transmission and receiving because it gave us capability in lithium niolate modulators. In addition, it gives some market access into the submarine part of our market, which is a place where historically we haven't played.
Finally, it gives us some additional manufacturing capacity at a time when we definitely need to supply our customers more product.
FON: Was the $3.6 billion purchase price for Pirelli too high or a fair price and how do you defend against critics who say Corning paid too much?
Fine: This is a company with real revenues as opposed to some of the startups and IPOs out there now. If you look at the value that Wall Street and investors put in IPOs right now vs. their revenues, and you look at this company as a multiple of revenues, this company was cheap.
FON: Can you describe the milestones of success that Corning has had in the fiber optics market?
Fine: Scientists at Corning invented the first low-loss optical fiber in 1970. As a result, we've been a leader in the fiber optics space ever since. We invested for many years, frankly, without making any money in it. But we're absolutely convinced that the era that is upon us now was going to occur as long ago as 30 years.
In the early 1990s, we became one of the first companies to manufacture optical amplifier game blocks. We know we're still the largest company in that space. In the mid '90s, we recognized the need for dispersion compensation in optical networks and invented and pioneered the use of dispersion compensators in optical networks.
In the late 1990s, we recognized the need for multiplexing and demultiplexing and formed a number of ventures and acquired a number of companies to give us a position in that space. In 1999, we began a series of acquisitions to further broaden our product range in that space. So it all started for us with optical fiber and it's been a logical continuous progression since then.
FON: What is the most critical mistake Corning must avoid?
Fine: Even though we're a big company, we can't act like a big company. We have to be aggressive. We cannot become risk averse and we have to innovate continually. In any big company, you run the risk of letting your ingrained tendencies dictate how you react to the marketplace. We can't do that.
FON: What business issues keep you up at night?
Fine: First and foremost, getting my customers enough product. We're growing at rates in excess of 100 percent annually right now and while we're happy for that growth, we have to satisfy our customers and it's very difficult in this environment.
Second, attracting, retaining and developing talent. The fight for talent is very tough right now. We're doing very well in that regard but we want to make sure that we continue to attract the kind of people that enable us to be successful.
FON: How are you attracting talent?
Fine: We try to create a work environment where people can innovate and feel like they're part of something important. We also continually modify our compensation system so that people get compensated with equity in the company and we work hard to grow our stock market price so people can realize financial rewards.
FON: What's next for Corning?
Fine: I think that we are firm believers in 40 gigabit and beyond systems and you can expect to see from us a full range of components, optical fibers and modules that enable our customers to deliver 40 gigabits to their customers. You can expect to see us continue to innovate and focus on driving down the cost per bit of optical systems.
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