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To: pinhi who wrote (29398)	8/17/2000 9:30:12 PM
From: Dealer	Respond to of 35685

JDS Is No Optical Illusion--FORBES It came out of nowhere and its CEO is a mystery man. Yet JDS might one day be the Intel of the Internet. By Eric Nee Where JDS Is Inside Market segments where JDS made its revenues in 1999 I was looking for JDS Uniphase--arguably the hottest company on the planet--and I was lost. All I could see were farms, and not very prosperous-looking farms either. Then in the distance I saw two construction cranes towering above a cluster of trees, and I knew I was headed in the right direction. They were the only cranes I had seen since arriving in Ottawa, a picturesque capital city that, like much of Canada, has seen better days, except that here, across from a barren field, was a spanking-new four-story building, with its parking lot nearly full. Its setting may seem incongruous, but almost overnight JDS has been transformed from a company hardly anyone had ever heard of to one that nearly everyone is interested in. This is not some profitless, flash-in-the-pan dot-com. JDS Uniphase stands a good chance of becoming the Intel of the optical age. It even has an Andy Grove knockoff as CEO. JDS lies in a sweet spot of the telecom business. Its lasers, amplifiers, and filters are at the center of the networking equipment that Nortel, Lucent, and Ciena make, and that telcos like WorldCom, AT&T, and Qwest buy to build the data networks that carry Net traffic around the globe. With bandwidth demand expected to triple annually for the next five years, according to South San Francisco research firm RHK, the network owners are building feverishly to keep pace. These days the guts of their networks are so-called optical components (we'll explain the technology later), which is why that market is expected to nearly quadruple, from $6.6 billion last year to $23 billion in 2003. JDS spotted this opportunity early on and moved quickly to plug holes in its product lines, buying up smaller makers of optical gear around the globe. Then, with demand surging, JDS went on a tear. It swallowed up nine companies over the past 12 months alone and just signed a mammoth pact to buy SDL for $41 billion, one of the richest deals the tech industry has ever seen. Revenues were up 133%, to $1.8 billion, with pretax profit margins of 32%. And JDS stock soared 434% in the past year, giving the company a market value of $93 billion. Indeed, JDS is growing so fast that analyst Jim Jungjohann of CIBC World Markets predicts that within two years it might have one of the top three market caps in the S&P 500. For all the superlatives, JDS may be about to hit some bumps on its wild joy ride. At 350 times next year's forecast earnings, the stock price incorporates some outrageous expectations, the sort that can be tough to live up to even when business is strong. JDS has the unique burden of having been cobbled together from companies all over the world; it will take a prodigious feat of telecommunications (if not telekinesis) for those entities to work together seamlessly. The products JDS makes are devilishly complex, and the demands of network builders for more sophisticated devices will only increase the pressure on its far-flung designers and manufacturers to find ways to work as one. The competition is toughening too, with Lucent planning to spin off its own optical-component business and Nortel likely to do the same. What's more, in May, on the cusp of its biggest deal ever, JDS's CEO--who had more to do with creating the company's acquisitive genetic code than anyone else--suddenly resigned. So while JDS may indeed be the next Intel, it won't be any cakewalk to get there. That an odd agglomeration like JDS can be worth $93 billion attests to the explosion in optical networking--which is another way of saying the explosion in broadband Internet traffic. Today data drive networks, and speed is everything. Companies like Sprint, WorldCom, Williams, and a host of others are busy tearing up streets and railroad rights of way to lay more and more fiber to carry ever greater torrents of data.