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Technology Stocks : LUMM - Lumenon Innovative Lightwave Technology Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Cosmo Daisey who wrote (757)	9/9/1999 3:02:00 PM
From: John Curtis	Respond to of 2484

And here's an article about fiberoptic "plays" courtesy of a threadster over on RB: www2.fiberopticsonline.com{F560F65C-2FEA-11D3-B647-00C04F481017}&VNETCOOKIE=NO Analysts consider Uniphase (San Jose, CA), E-Tek Dynamics (San Jose, CA), JDS Fitel (Nepean, ON), Ciena (Linthicum, MD), and SDL (San Jose, CA) as the purest investment plays on optical networking today. While trading in these stocks has often been volatile, their valuations are commanding premiums over the broader telecom equipment index. In some instances, these premiums are being awarded despite inconsistent historic records. Investors in the optical networking space appear to be looking in one direction only?ahead. Internet enablers The products these companies make are complex and often difficult to understand, even for the technology-savvy investor. Likewise, the determinants of success and failure in this market can be hard to predict. For example, the distinction between pump lasers from Uniphase and SDL can only be determined by a lengthy evaluation of performance metrics, including output power(both out of the chip and out of the fiber), signal-to-noise ratios, frequency stability, spectral linewidth, life test data, and a host of other characteristics. Only the bravest of investor would venture down this path. But the designation, "Internet enabler" is easy to grasp. The market is quickly embracing the moniker, and these photonic stocks are benefiting from just such a designation. Are the photonics players Internet enablers? Yes, in the sense that expectations of the Internet?s greater potential will not be realized without them. We have all heard the unprecedented record of growth being generated by Internet traffic. The amount of data being dumped on the public network is tremendous and shows no sign of slowing. Without photonics and its unlimited bandwidth potential as the fundamental transmission technology, Internet performance will slow to a crawl as subscriber growth increases unrestrained. Derivative plays Investors are hungry for investment opportunities in the optical networking space, as evidenced by the valuations of our index of companies. This interest is beginning to wash over derivative plays that participate in this market. Optical Coating Laboratories (Santa Rosa, CA) and Corning (Corning, NY) are companies that make optical components for WDM systems, but less than 50% of their revenues currently come from this source. Noticing the impact to their valuations, these companies are all focusing product and marketing efforts towards optical communications products. Photonic equipment stocks will trade at a premium, as long as expectations are met. Clearly the trend towards higher valuations is impacting the entire optical networking group, and not limited to one or two individual stocks. The broad nature of this affect suggests that it is market driven, and not company specific. The valuation benefit photonics companies are receiving as Internet enablers is both legitimate and sustainable, given their roles in this new market. I believe the market for photonic networking products?both systems and components?will remain vibrant through the next five years, as Internet-driven infrastructure spending continues. And these companies will likely trade at premiums to the larger telecom equipment sector as a result. ------- Interesting article, eh? They say when speculating you increase your odds of success by buying the provider of the "picks & shovels to the gold miners" rather than buying the gold miners themselves. If you think of the gold miners as the teleco's, then LUMM could be considered a provider of the 'ol picks and shovels, no? Regards! John~