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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: zbyslaw owczarczyk who wrote (6512)	8/11/2000 2:12:33 PM
From: Kenneth E. Phillipps	Read Replies (1) \| Respond to of 14638

More about the Mitel device: Friday 11 August 2000 Hot new chip drives up Mitel shares Product that doubles bandwidth propels stock to best gain in eight years Bert Hill The Ottawa Citizen; with files from Bloomberg News Rod MacIvor, The Ottawa Citizen / National Research Council fibre-optic scientists Dr. Boris Lamontagne, left, and Siegfried Janz hold optical test chips developed for Mitel Inc. that will more than double information flow through optical fibre. Mitel Inc. stock took off at the speed of light yesterday after it announced a hot new product aimed at the fibre-optic market. Investors jumped on board when Mitel said it has developed a semiconductor product that doubles bandwidth, or transmission capacity, more cheaply and effectively than competing technologies. The stock jumped $5.60 or 22 per cent to $30.70. In U.S. after-hours trading, Mitel continued to rise, scoring a 42 per cent gain to $24 -- it's biggest one-day gain in eight years. Working with the National Research Council, Mitel said it has developed a prototype product that will be ready for testing by major telecommunication companies early next year. The Mitel-NRC collaboration could mean a new contender in the hot competition involving Nortel Networks, JDS Uniphase and scores of start-up companies, to design the next generation of fibre-optic gear. Mitel started nibbling at the booming optical market recently with new products aimed at fixing bottlenecks in local networks. The optical market has been a favorite for investors for months because of the huge demand and fat profits. "I think investors looking for optical news are excited (by Mitel's announcement), said Richard Woo, an analysts with Thomason Kernaghan & Co. in Montreal. "There is demand for these products for sure." Mitel said the new semiconductor product can boost the number of channels of light on a single glass fibre from 16 to 40. That could double to 80 in the near future using simpler and smaller chips. The product uses something known as Echelle Gratings, which bounce light signals off a staircase-like silicon chip structure to create new streams of light. Dr. Richard Normandin, director-general of the NRC's Institute for Microstructural Sciences, said Echelle gratings, around since the late 1800s, have attracted intense fibre-optic research interest in the U.S., Canada, Sweden and Japan in the last decade. "Most people thought that that while the grating generates very accurate light paths, there would be too much cross-talk (interference) as the number of channels increased." He said NRC and Mitel were the first to find ways to make the technology work at high channel counts. Dr. Normandin said the work "is part of our mission to look five years ahead of the market and de-risk the future." Mitel senior vice-president Moris Simson said, "By being able to etch deep enough, smooth enough and vertical enough into the silica, we have laid the foundation for dramatic improvements." Mitel said its expertise in silicon semiconductor production in Kanata labs and a Bromont plant allowed it make a working chip that is much smaller than anything on the market. "With a 40-channel multiplexing device, we believe our footprint per channel is five times smaller than competing alternatives," said Dr. John Miller, director of photonics at Mitel's semiconductor division. Most fibre-optic equipment uses thin film and filters to split light signals into many streams and keep them separate as they travel. But this product is labor intensive and costly to produce, particularly as channels counts have risen. Researchers are moving in several directions to find answers that will reduce production costs and increase capacity. One alternative is Fibre Bragg Grating, a technology that also bounces light streams and allows only select ones to flow through by altering fibre with special materials.Alacatel recently bought Innovative Fibres of Gatineau for $260 million to gain access to Fibre Bragg technology, originally developed in federal government labs. And JDS Uniphase's pending $41 billion U.S. deal for SDL Inc. of San Jose will give it access to Fibre Bragg amplifier modules, a hot property in the submarine cable market. Another alternative is Arrayed Waveguide Grating, which is based on semiconductor materials. Mitel said this technology, which is gaining support as channel counts rise from 16 to 40, is hampered by a larger chip size, exotic materials and production costs. Nortel Networks is a major buyer of Arrayed Wave chips produced by Bookham Technologies in England. JDS has said it is working on its own variations internally. Nu-wave Photonics Inc., an 18-month-old startup which set an Ottawa record this spring when it raised $59 million in second-round financing this spring, is working on a chip-based approach to fibre-optic gear. "There are lots of people who say they can do (wave multiplexing) on a chip," said Peter Schendel, a fund manager at Strathy Investment Management in Toronto. "Lumenon (Innovative Lightwave Technology Inc. of Montreal) claims it has such a beast. The question is, can people replicate it in vast quantities."