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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: pat mudge who wrote (12316)	8/14/2000 12:13:25 AM
From: tech101	Respond to of 24042

Jessee Soto of the Highmark Funds talks about fiber optics The following interview was conducted by Mark Johnson of the Internet Financial Connection on the Silicon Investor - Start Audio Now: WHOWEVER SAID THAT THE TECHNOLOGY SECTOR wasn't volatile? Tech stocks continue their wild and volatile gyrations. The Nasdaq was nearing the 4,300 level in mid-July, only to reverse course and trade in the 3,600 area recently. Jesse Soto, Senior Securities Analyst for the Highmark Mutual Funds, thinks the Nasdaq, along with the rest of the tech sector, should see brighter days within the next six months. He especially believes the tech market will experience a relief rally once the Fed decides whether to raise interest rates. "Once that is out in the air I think the market will begin to stabilize," Soto says. One area Soto has been keeping his eye on is fiber optics. Fiber-optic component maker JDS Uniphase has been on a roll acquiring other companies in the optics realm, including E-Tek Dynamics and SDL. "This merger mania has put a lot of upward pressure on companies in the fiber optic space," states Soto. "The mergers in the fiber optic area bring to light how capacity-constrained this segment of the market is. It's an area that is experiencing very high demand as companies try to increase their infrastructure and provide next-generation services. . . Companies such as JDS Uniphase are willing to pay rather large sums to acquire technology. It is testimony that it is a very difficult business to get into with high barriers to entry." One company Soto likes in fiber optics is Bookham Technology (BKHM 58), which manufactures optical components based on SOI (Silicon On Insulator) wafers using traditional semiconductor manufacturing techniques. Soto adds that Bookham is addressing one of the biggest problems in fiber optics right now -- the availability of components. Soto states, "Large volume manufacturing techniques haven't been developed yet in the fiber optic component space. Many of these devices actually involve a lot of steps done by hand. By using traditional semiconductor manufacturing techniques, Bookham is trying to do what Intel did for microprocessors, which is to bring down cost through manufacturing large volumes. . . They're really the only one out there doing this on silicon. Most of its competitors are using a type of glass known as silica." Bookham's high-profile customers include Nortel and E-Tek Dynamics (a division of JDS Uniphase). Another company Soto likes in the fiber optic space is Harmonic (HLIT 23 3/4), one of the few companies making fiber optic systems designed to increase the capacity of cable infrastructure. This technology will become increasingly important as cable companies expand their offering of enhanced services, including Internet access, telephony and movies on demand. The proliferation of these enhanced services will drive the demand for Harmonic's products. Shares of Harmonic, which were trading at a high of $60 in early June, have become depressed and are now trading in the low $20s. One of Harmonic's main customers, AT&T, cut back its purchase of products. As a result, sales slowed down. Soto views the weakness in shares as a good entry point, saying that the weakness in AT&T's purchasing pattern is temporary, and that AT&T will resume purchase of Harmonic products after it finishes installing previously purchased products. Soto also notes that Harmonic is making progress with other cable companies and that long-term international growth should bode well for the company. Another area this Tech Guru likes is wireless. ... ... audioinvestor.pyxos.com