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

To: a_dumb_blonde who wrote (29495)	8/6/2000 1:05:54 PM
From: EJhonsa	Read Replies (1) \| Respond to of 54805

JDSU: I believe the the physical build out of the long haul portion of the New Public Network , (which is where the JDSU tornado has been actively turning), is primed for a breather. I'm inclined to disagree a little. It should be remembered that voice still takes up roughly 40% of all traffic on optical networks. In some cases, such as the networks of MCI and Sprint, it's still over 70%. Voice traffic isn't growing much, as you might guess. Data traffic, of course, is exploding, far more than even the numbers put up by JDS Uniphase and SDL reflect. As data starts becoming 85-90% of all optical network traffic, the numbers put up by these companies will become more reflective of this growth. In other words, I think it's possible for growth to accelerate for another year or so, maybe longer. JDSU does indeed operate in this portion of the infrastructure, but I believe the new-new (!) tornado will be companies exclusively providing switches and software for the edge of the network. I would agree that even faster growth will come from this segment, as metro DWDM networks start getting rolled out. Although Nortel isn't a pure-play for this market, their dominance of the metro DWDM field makes even their position in the long-haul market look like nothing in comparision. As for pure-plays, look into Redback. Siara, the company they bought out last year, is working on an integrated router/add-drop platform which could offer huge cost savings when compared to standalone products offered by companies such as ONI, Chromatis (bought out by Lucent), Cisco, and Juniper. I've heard that the processing power of the ASICs they're using is quite phenomenal as well, due to the fact that their engineering teams includes two of the AMD engineers that worked on the Athlon. Basically,in the telcom space, I think the tornado is moving UP the OSI model. We just 'did' the OSI 1 layer and are now moving up to layer 2 and 3 , where the switches/software are at the edge of the long haul. I'd agree that as data overwhelms voice as a percentage of traffic on optical networks, the growth exhibited by the router/switch vendors, as well as the companies that make chips for them, will eclipse that of the optical component/systems manufacturers, although not perhaps for the reasons you might think. I wrote about this a while ago at TMF (see bottom paragraphs): boards.fool.com Eric PS - I also wrote a post at TMF regarding why the JDS Uniphase/SDL deal makes sense, although a couple of the things I stated have already been mentioned by Pat and Mucho: boards.fool.com