Tech:
Systems:
Pretty much agree. A few tidbits...
The truth is that much of the equipment that will hit the surplus market will be good for (maybe) spares. The architecture (hardware to software) of say Ciena equipment is far different from say Nortel. So in spite of wavelength and data standards, equipment is not easily interchangable. The standards just makes sure Ciena fiber can talk to Nortel fiber.
Line card A fit into rack B? Fugedaboutit!
If you have a Nortel rack system, and the company folding has the same, then you might bother to take a look at their surplus list. Operators are not cavalier about the condition of the equipment either.
Bottom line: Good luck finding much useful, or that you would want to put into your system for very long.
Waxing poetic:
The thing that is hurting JDSU's component sales (relative to the bubble) is the the lack of green field building. That was venture money from CLECs, and a lot of debt money from the ILECs. All gone now. (Interesting the bonds from Nortel are now in the same category as venture capital...ironic, no?)
The CLECs never made it to cash flow break even, and the ILECs are struggling under the effects of the heavy competition they created to get the CLECs into that position. Creating more new capacity (and thus more competition) is not a good idea right now. Getting income up is. And the FCC is helping (or will help) with bundling, facilities based costing, etc.
The future race (a turtle race?) will be between the cable companies and the ILECs, both of whom can claim something like 98% households passed. Microwave has an very good chance from a technical perspective, but most of those are already owned by ILECs or LDCs. Interesting side players will be the satellite companies, but they will generally be rural plays.
Bottom line: If the income of the carriers goes up based on changes the FCC is making / just made, you can bet there will be new equipment ordered. That will take about one fiscal year to show up at the leaders. They will then start to order new equipment to increase capacity or reduce costs. Mostly the latter. The followers will then wake up and put in some green field orders. So: one year to solid recovery (hopefully), and two years to major advance (maybe).
Components:
The biggest thing JDSU brings to components is capacity. All component sales in the next year will be small numbers. They will be for things that are not in inventory: leading edge, latest technology. That puts JDSU in no better position than a start-up. In fact, maybe worse due to higher overhead costs and bureaucracy. Until capacity is a big part of the equation, a start-up could give JDSU a very big run for their money. JDSU would probably end up having to buy them for a nice premium. So that is what I mean about well positioned: lot's of cash to buy their market position.
The crystal ball:
I think the next "push" is going to be VOIP over cable, which will mean quite a bit of (but not massive) green field network overlay on existing cable routes. I see the indicators as HFC equipment players like Gen Inst, Sci Atl, and Mot. Not that I would put my money there...just indicators.
JMHO.
-Own |
