Oh, I get it. This guy is an investment advisor.
In recent days we?ve received numerous calls from
investors wondering whether it is time to buy the optical
stocks, particularly the optical component stocks. Their
argument is not about valuation (that?s a different story), but about recovery in demand.
Recovery? It never fell.
Here?s how it goes:
Data traffic continues to grow at 60-110% per year, but
carriers have dramatically reduced investment in their
networks over the past year. Many carriers are now
experiencing increased latency - constant delays in
transmission - on their networks. To maintain quality of
service, these carriers will be forced to re-invest in their
networks. The resulting increase in spending will benefit
the optical systems vendors (Alcatel, Ciena, Lucent, and
Nortel) but even more so the optical component vendors
(Agere, Corning and JDS Uniphase) who are most
leveraged to a recovery in demand. So now is the time to
buy the optical component stocks!
That hasn't been the crux of my comments, but there's a lot more in it than this guy thinks.
We strongly disagree with this view; our industry view on
telecommunications equipment is Cautious, and not without
reason.
That's hardly a "strongly disagree".
The ?Latency Argument?, we think, is flawed on
multiple levels. Here are the problems we see with it:
First, we don?t think network latency is an indicator of
rising capacity utilization for optical equipment.
How could network latency be an indicator of rising use of optical equipment since carriers are avoiding any capex. But, that wasn't what was stated. What was stated is incoherent. "latency doesn't indicate rising capacity utilization". There isn't enough optical equipment out there to claim it has anything to do with latency.
The rest of this is uninspired and sounds like something someone would have penned on Frank Coluccio's thread two years ago. Meanwhile, throughput has doubled. |
