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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (28231)	7/18/2000 11:07:29 AM
From: powerchip	Respond to of 54805

smartmoney.com JDSU and SDLI Straus and Scifres (who will stay on as co-chairman) have much more in mind than that. The two companies want to build a "truly integrated optical circuit on a wafer," said Scifres. That is, they want to create a technology that reads and directs information on a fingernail-size chip, instead of a big module that requires placement in a closet. If such things existed, phone companies would be able to use them to carry more Internet information at higher speeds for lower costs. And that means businesses, and consumers, could connect to the Internet faster and cheaper. "The days of 'a system on a chip' have always seemed far away, but with this merger I think we have shortened the time frame," Straus told investors during the call. With so many smart people in the same company, Wrona says the merged entity could conceivably dominate communications chips the way Intel (INTC) dominates PC chips. Strong stuff, but you need faith to believe it will work, because there are few comparables out there. "The market is just beginning, and we need to position ourselves with early design wins," said Straus, referring to a contract to provide a new kind of equipment to a large customer. Because SDL and JDS already have strong credibility in existing products, analysts aren't especially worried about the lofty long-term goals. "For this to be successful, I don't think we have to be real specific about milestones" such as the system on a chip, says U.S. Bancorp Piper Jaffray analyst Conrad Leifur. If the two companies simply do what they've been doing, they can still prosper, the thinking goes. But JDS is aiming to produce a whole new kind of hardware. And if SDL's engineers help the company design a new system on a chip, this sector could get hard on the competition indeed. This meshes with Gilder's vision of JDSU becoming the Intel of the telecosm.