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Politics : Formerly About Applied Materials

AMAT 339.94

+3.3%

Feb 11 3:59 PM EST

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To: Katherine Derbyshire who wrote (47804)	6/10/2001 11:27:27 AM
From: robert b furman	Read Replies (1) of 70976

Hi Katherine,OT to AMAT I'm not an expert,but do try to learn as much as possible regarding the fiber optic build out evolution. I believe that the development of photons thru fiber is as dynamic a megatrend as electrons thru microprocessors in computing was/is. Lastweek the # 2 man from CSCO (heir apparent to John Chambers - but left to run his own wireless comp.)was on CNBC. He was very impressive. It was his opinion that the fiber long lines have been sufficiently built out.He also thought that the big networks have pretty much been built(thusly junipers problems - the big systems have been done). It was his position that the last mile (which is the terf of the rbocs -sbc and other baby bells) will now incorporate fiber optic technology. This build out will be painfully slow - as the rbocs don't exceed cash flow - but are the only players with the money to slowly carry out the build out. This leaves us searching for companies that build components for Metro Area networks i.e buildings or groups of buildings and downtown business centers or suburban business centers. This will be slow but it will be good business and it will be a LONG term money maker.Cisco still is leading in this area, but it is a small piece of the huge growth they've ridden for quite some time. As these many small MAN's (Metro Area Networks) come on stream - data growth will continue to grow exponentially. It is my opinion that long fiber growth is almost now a mature industry. Bandwidth is now the next efficiency driver.Just as dense wave division allowed 80 different colors of light to bounce thru a fiber cable - now band width turns on ( increases) the future capacity of the existing fiber lines. Bandwidth is the capability of turning light off and on in short and long blasts of light - very similar to electrons representing x's and o's in computing.The capability of turning the light on and off is done by modulators.Each(state of the art) laser has 80 modulators - one for each color of light being sent thru the fiber. Current state of the art modulators are working at 10 gbps and the new standard which is really expensive is 40gbps.The capability of expanding this modulator speed (bandwidth) is maxed at current physical limits.New technologies are just at the cusp of developement and will reinvent the levels of performance that cables will carry. So component makers for metro area network systems will be great business and the creators of faster modulators will win big time as well. When new more efficient modulators/lasers come out, all long term players will be forced to upgrade or their cost of communicating will hurt their margins. The need to upgrade will be continuous and the implementation of MAN's will be slow but very deliberate.The driver of this growth will be the rboc's. The ex employee from CSCO thought a recovery from the ixec's,dsl co. was 12-18 months out.I think he's on the money. The more recent growth to find will be MAN's and Wireless (that a whole new sermon).gggg My holdings that fit the above growth scenario are : SBSE - component maker KVHI - modulator creator and wireless antennae maker There are others like Lumera - modulators and of course CSCO. If you learn of others I'd love to hear about them. This is just a novice's attempt to understand a very complex industry and I could be wrong. Bob

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