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Technology Stocks : SDL, Inc. [Nasdaq: SDLI] -- Ignore unavailable to you. Want to Upgrade?

To: OWN STOCK who wrote (2637)	8/25/2000 1:46:59 PM
From: limtex	Respond to of 3951

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To: OWN STOCK who wrote (2637)	8/26/2000 3:57:24 AM
From: pat mudge	Respond to of 3951

I snatched this off the JDSU thread: <<< August 25, 2000 17:25 Nortel mulls spinoff of fiber-optics parts unit By Susan Taylor BRAMPTON, Ontario,(Reuters) - To maintain a bright future for Nortel Networks Corp.'s market-leading fiber-optic systems, chief executive John Roth said Friday he's mulling a plan to spin out the firm's fiber-optics parts business. Nortel, the world's No. 2 network equipment supplier, told Reuters that creating a separate company floated on an exchange is one option to counter the consolidating fiber optics parts industry. "Our components business underpins our leadership in fiber-optic technology...What's the best way to impact Nortel's stock price? It's to be an absolute leader in the systems business," Roth told Reuters in an interview at the company's Brampton, Ontario, headquarters. "If we were to create a partial spinout of our components business, we could potentially create a stock, which then it could go and acquire component companies." Roth added that Nortel would want to stay in a controlling position. [Better known as wanting your cake and eating it, too.] Nortel, which last month abandoned talks to sell its components business to Corning Inc., the world's largest supplier of fiber-optic cable, said a spinoff could also help it maintain its dominant market position for fiber-optic systems. [Not sure of his reasoning here.] Nortel expects sales of about $2.5 billion from its components business this year - a 200 percent increase over 1999 sales - and is investing $1.2 billion to boost component production by 350 percent. "It will become a $9 billion business at retail in a short space of time -- about 24 months," Roth said. Nortel projects total fiber-optic revenues of more than $10 billion this year, sales some analysts estimate at about $12 billion. Phone carriers and Internet service providers have a near insatiable appetite for fiber-optic systems and the parts used to build them. The Internet and a string of new communications devices are pushing growing traffic on to networks, which fiber-optic systems are better equipped to transport than traditional copper networks. The components in fiber-optic networks are used to help boost capacity and push large volumes of traffic along fiber strands. "I could have a controlling interest in a components business for a long time and let that components business acquire other companies," Roth said. "It sits rather well -- we've created the business, we've spun out a number of companies, so we've got experience in doing that now. We know what the process looks like. And so we're keeping our options open." Roth said he is concerned that consolidation in the components market could constrain supply, which could drag down Nortel's optical system sales. JDS Uniphase Corp.'s planned purchase of SDL Inc. for $41 billion is the most recent and largest example of mergers in that sector. The U.S. Department of Justice asked JDS and SDL for more information about the deal late Thursday. Roth said he has told JDS Uniphase chief executive Jozef Straus that he does not want that company to be its only supplier for any products. "I'm not going to be sole sourced, so how are we going to solve that?," Roth said he told Straus. "He said okay, so we'll solve it, we'll figure it out." Roth said a separate supplier of some products may be the answer. "I want another company that makes parts (JDS) also makes," he said. ``And if they've all disappeared, then I guess (Jozef) you have to license somebody to make some of those parts or something like that. You figure it out (Jozef), or I'll figure it out." With a components unit spinoff, Nortel could also unearth substantial buried share value. The price tag for that business in recent sales talks with Corning was reportedly $100 billion. The Corning talks collapsed, Roth told Reuters, over control issues. Nortel wanted 60 percent control of the components operation, while Corning wanted to maintain independence. "What I was worried about was that...our focus is so much on the system that we were not doing justice to the components -- and I wanted a stronger components business. And if we weren't going to do it, then let's put it together with somebody else who would, Roth said. "They wanted to be absolutely independent and we wanted a high degree of control. And that was a gulf we couldn't close," he said.