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

To: SKIP PAUL who wrote (1560)	3/16/2000 3:38:00 PM
From: Don Johnstone	Read Replies (1) \| Respond to of 2484

No not exactly, just in general terms. They will be manufacturing DWDM chips obviously to meet the market demand at that time, be it 8, 16, 32 or whatever wavelengths. I assume they will package them ready for use by the customer, but I'm guessing. DWDMs presently sell, packaged, for about $600/channel. So an 8 channel DWDM would sell for $4800 and cost about $1000 which produces a gross margin of $3800/unit. With 500 units possible/day means a possible daily gross margin of 500 X $3800 = $1,900,000. A run of 4 channel DWDMs would produce $1400 X 500 = $700,000 gross margin/day. A run of 16 channel DWDMs would produce $8600 X 500 = $4,300,000 gross margin/day. Don't forget that's using today's pricing. Prices will drop. JDSU is automating with Samsung's help so the cost will come down and thus the selling price. But the impact of LUMM's costs remains to be seen. I think the impact will be substantial. That JDSU and the other established players will continue to establish the selling price is very likely. I don't see LUMM's costs being beaten by anybody. DJ