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Technology Stocks : SDL, Inc. [Nasdaq: SDLI] -- Ignore unavailable to you. Want to Upgrade?

To: Kent Rattey who wrote (518)	11/8/1999 11:46:00 PM
From: pat mudge	Read Replies (2) \| Respond to of 3951

From SDL's presentation at the AEA Classics investment conference: Our DWDM business grew 300% this year. Have 200 patents, 90 pending, and 6have 60 PhDs on staff, the largest concentration in the world. Lucent, Corning, Alcatel are all 10% customers. Eps up 4X in one year. Recent developments: Undersea markets: one year ago we had no presence, last quarter it was 25% of business. In February we signed a four-year exclusive with Alcatel, in June we signed a second major contract, were in production by September, and doubled output from prior quarter. We'll double again in Q4. IOC: Had 5 to 6 million in revenues last year. Q2 they increased 30%, and again in Q3. Signing major contract for 10 gig with major customer will take us way beyond original projections at the time of acquisition. Ramp in Q4 with serious volumes in December, and explosive growth in 2000. Presently a $10 million run rate, but could be 40 million next year. Margins will improve as product ramps. Lucent is primary competitor and many clients are also LU's competitors and feel more comfortable buying from an independent supplier. IOC now has ten customers. JDSU is not primary competition in this space. Technology is difficult --- difficult to cut lithium niobate crystals --- and other innovations give advantages as well. Now it's up to us to manufacture. As DWDM moves to higher channels and higher data rates, it's to SDL's advantage. Market opportunity is estimated at $23 billion in 5 years. SDL growing faster than market. As LU ramps its 40 gig products in Q4, it'll benefit SDL. Year 2000 will see sizeable revenues and very good profitability. RAMAN amplifiers: 1 1/2 watt allows transmission of light over 20 to 30 kilometers. Can extend distance in undersea, for example, between islands and in coastal stitching. LUC says only way to get to 40 gigs is RAMAN. It makes fiber transparent and you can use entire entire fiber band for channels. Now deploying high power single-mode amplifiers. Shipped 30 boxes to 9 customers last Q. For terrestrial, need to reduce costs. 10 gig modulator not leading market yet but has the potential. Focus: continue to work on higher channel and data rate systems. Also continue work on modules like RAMAN. Strength in actives. We do have passives --- Fiber Bragg Gratings, for example --- and continue to develop where we have a need. 500 mW laser is being reliability tested. Going into pump module. Need this for Asian market. 1 w is testing. Enhance manufacturing --- improving yields 3 to 4 X in 18 months. After we signed 4 year agreement with Alcatel, other customers were convinced to come on board. Now qualifying modular end of transmitter now. Customer base grew from 9 to 17 in one year. IOC may be up 5 ot 6 X in 12 months. Our $5 million Polaroid acquisition gave us 40 patents, some licensed by competitors, a multi-million dollar contract, and RAMAN technology. Should see 10 - 15% sequential growth in Q4. Last quarter 2/3 of revenues were from fiber optics. In Q4 it'll be 3/4. Metro market: Many companies springing up. Working on bringing costs down. Goal: to advance modules, not just do passives for passive's sake. 1550 (long haul) research activity in wavelength tunable lasers. Can do 15 at 100 gig, and 30 at 50 gig. No production capability yet. 10 mW output and tunability more than 12 mos away. We've worked on RAMAN for 7 years and don't know if competitors can catch up. We have 9 customers testing now. Have 80 to 90% market share for gratings; in 6 mos will have over 50% in undersea pumps and if we get third customer it could be 70 to 80%. The possibility is there. Market is growing. 4Q almost double again. Undersea pump chips ramping successfully. Alcatel, Tyco and NDD are the three giants. We're qualified at 2 and hope to get third.