John,..Re:.ceo of lu was just on cnbc and he said company specific!
Yes, he said demand in the optical area, components and networking, was explosive and the LU miss was an execution problem. Part of the execution problem was not expanding capacity quickly enough to meet the demand.
Re:.Therefore assuming jdsu didn't screw up in their planning and was apply to keep up as best they can we should be buyers now?
JDSU has also voiced concern over capacity restraints but seem to be more agile when it comes to meeting customer demand schedules. <g> I will be a buyer this morning when the chart turns. <g>
More good news from DJ news. Can't provide a link because it's from broker's site.
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6 Jan 15:01 By Johnathan Burns
NEW YORK (Dow Jones)--Brian Hayward fell into managing a telecommunications fund. Sort of.
It was back in his days at Mississippi Valley Advisers that the then equity analyst covering transportation - who had intended to cover only transportation - took over the job of a recently departed colleague on the telecommunications beat. "It was the luck of the Irish, I guess," said Hayward.
He isn't counting on luck these days. And he isn't doing much looking back. As manager of the $1.7 billion Invesco Telecommunications Fund, all Hayward has time to do is keep abreast of what comes the day after tomorrow. And the days after tomorrow look like wireless, data and wireless data.
But here's the thing for Hayward - the secret is not the service providers, the great, big phone companies, the mammoths that will still weed each other out over the next decade. The winners, for the next five years at least, will be the ones who make data move and make it move fast.
Which is why Hayward likes companies like Nortel Networks Corp. (NT), formerly Northern Telecom, JDS Uniphase Corp. (JDSU) and SDL Inc. (SDLI).
All three companies build products to help route data traffic faster over broadband telecommunications networks.
"What we look for is, first, pick the trends," Hayward said. "We see
(broadband network build-outs) are still in the early stages."
Hayward expects the big telecommunications companies - like AT&T Corp. (T), MCI WorldCom Inc. (WCOM) and their Bell competitors - will continue to spend on building and improving their networks to handle data and wireless capacity. The immediate winners will be the equipment makers.
"We're becoming more heavily weighted on the technology side than in the service side," Hayward said. "You may successfully pick a winning service provider, but it will be a while before (one emerges). There will be a lot of spending. You want to be an arms dealer in an arms race."
Hayward likes companies with equipment in optical switches. Optical switching effectively allows more traffic to be routed over networks using light. He said service providers are moving away from circuit switches based on electronics, where Nortel and Lucent Technologies Inc. (LU) have excelled.
"(Nortel) is kind of leaving Lucent behind in the optical switching area," Hayward said. "AT&T has already told us they will not spend any more money on (electronic) circuit switches."
The Invesco Telecommunications Fund, which has garnered a five-star
Morningstar rating, had a one-year return of more than 131%, according to Invesco's end of November statistics. The return compares favorably to the almost 21% return of the Standard & Poor's 500-stock index over the same time.
Hayward sees the fund's future holdings leaning on wireless data - those who make the handsets and those who provide the services.
The fund has invested more money in Nokia Corp. (NOK) than any other handset manufacturer.
"Nokia is way ahead of the others in market share," he said. "It was
interesting. One of the things going into the end of 1999 was concern that Nokia's margins would have to contract. But they're still in the 20% range. We'll keep them until they stumble."
As for service providers, Hayward likes several competitive local exchange carriers - small phone companies that are competing with the Bells for a sliver of the telecommunications business.
"Since so many of these are new companies, you have to place the bet on management with a solid track record," he said.
Hayward likes CLECs like Allegiance Telecom Inc. (ALGX), led by Royce Holland, co-founder of MFS Communications Co. - a CLEC acquired by WorldCom.
"That's a bet on management," he said. "They also have a national versus regional network and a good balance sheet."
He's also bullish on Teligent Inc. (TGNT), led by former AT&T president Alex Mandl. "We are a big believer in fixed wireless," he said.
Another company to watch is McLeodUSA Inc. (MCLD), Hayward said, because of the company's properties. "They've got 40% market share in Iowa," he said. Hayward is also looking at international CLECs. He believes deregulation overseas will see the creation of profitable service providers there. He also has an eye on yet-to-become-public companies with optical transmission technology.
"There are companies out there who, if they have what they say they have, have disruptive technology" that will change the market, he said.
In the end, telecommunications isn't so far from transportation. It's all about things moving. The only difference is, telecommunications is moving much faster.
"The trends are: (the aftermath) of deregulation, the explosion of data traffic and the proliferation of wireless," Hayward said. "If you look back, every forecast that has been made about wireless penetration has been too low."
-Johnathan Burns; Dow Jones Newswires, 201-938-2020,
johnathan.burns@dowjones.com
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Cheers,
Lee |
