Optical Networking Market Growing "At the Speed of Light" According to NationsBanc Montgomery Analyst; Emerging, Rapid-Growth Sector Provides Opportunity for Investors
Jan-29-1998 2:49 PM, BUSINESS WIRE, Business Editors/Telecommunications
SAN FRANCISCO--(BUSINESS WIRE)--Jan. 29, 1998--The explosion in data, fax, Internet, and voice communications is driving increased demand for high-speed optical networking, according to NationsBanc Montgomery Securities analyst, William Magill.
The market is in the early stages of development and is expected to generate $8 billion in revenues by 2001, a four-fold increase from present levels, he said. Magill made his remarks at the NationsBanc Montgomery Securities 15th Annual Technology Week investment conference, which began Jan. 27 and runs through Jan. 30. The conference has attracted more than 1,900 attendees to hear presentations by 147 public companies and 35 private companies. During the conference, NationsBanc Montgomery Securities analysts are conducting a series of workshops that provide attendees with up-to-the-minute analyses of a wide variety of industry segments.
Optical networks are essential in today's environment for several reasons, according to Magill. More users are getting on-line with faster modems. This higher-speed, more frequent access has flooded the "back-bone networks." Magill noted that, for instance, local and long distance telephone companies can't handle the load being placed upon them. Furthermore, electrical-based technologies cannot keep up with bandwidth demands.
Magill noted that as telecommunications companies shift from being single-service monopolies to providers of multiple services, they will need the service and protocol transparency supported by optical networks. In addition, optical networks offer a significant cost savings to these companies trying to remain competitive in the telecommunications market.
"Optical networks are well positioned to meet the emerging needs of carriers," said Magill. "They offer higher bandwidth at lower costs per bandwidth. Furthermore, they are more reliable and are indifferent to traffic type and protocols," he said.
The number and variety of companies that have entered the optical networking market have increased substantially in recent years, providing investors with attractive investment opportunities. Magill estimates that the global market will grow from $2 billion in 1997 to $8 billion by 2001. He also predicts that enabling components for all optical systems will be in place by 2000.
Magill concluded his remarks by saying, "The optical networking industry is here now and is growing rapidly. The need for all-optical solutions is undeniable and investment options are available for all investment tastes, with a steady stream of new and unique market entrants." His stock picks in this sector included Ciena and Uniphase.
NationsBanc Montgomery Securities LLC (NMS), a subsidiary of NationsBank Corporation, is a full-service investment bank and brokerage firm with approximately $800 million of regulatory capital. The company provides research, trading and issuance in the equity and fixed-income markets (high yield, emerging markets, high grade and mortgage-backed markets). Other services include M&A advisory, financial buyer coverage, loan syndications, global investment banking, real estate finance, mortgage finance, money markets and the primary dealer.
Through NationsBank, NMS clients can also access products and services that include senior bank debt, bridge financing, real estate banking, treasury management, trade finance and risk management (derivatives products and foreign exchange).
NMS is a registered broker-dealer with the Securities and Exchange Commission and is a member of the National Association of Securities Dealers and the New York Stock Exchange. NMS employs more than 2,200 investment professionals.
(Copyright 1998)
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