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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: T L Comiskey who wrote (10161)	10/28/2000 12:51:30 PM
From: Jim Willie CB	Respond to of 65232

FIBER-OPTICS GROWTH FOR REAL (Martin Wolk of MSNBC.com) ‘This growth in fiber-optics industry is for real. There is just so much demand we cannot fulfill by any other technology.’ — JAY PATEL, Yankee Group What these companies have in common is that they all need to invest heavily in new infrastructure while trying to stave off growing competition in their core markets. That raises the question of whether struggling telecom carriers, facing a slowing economy, will have to slash capital spending on big-ticket items … like fiber-optic networking equipment. Arnold Berman, chief technology strategist for Wit SoundView Technology, said fiber optics will be the last place telecom carriers will look to cut spending. “The fact is that for carriers right now, their biggest problem is keeping up with data traffic,” he said. “The highest return investment is the optical spending. Even in an environment in which carrier capital spending could be restricted, it’s the optical portion of the budget that as a general rule will be the last to be touched.” “This growth in fiber-optics industry is for real,” said Jay Patel, a senior analyst at the Yankee Group, a Boston-based consulting firm. He estimated that revenue for the industry would rise at a 40 to 50 percent annual rate for the next five years as demand for data traffic capacity continues to skyrocket. “There is just so much demand we cannot fulfill by any other technology,” he said. Even after a healthy rebound Friday, fiber-optic players Nortel, JDS Uniphase and Ciena were down 20 to 38 percent for the week. But while Nortel is well off its 52-week high, the stock is still a robust 57 percent above its level just a year ago, while JDS Uniphase is up 112 percent and Ciena an eye-popping 522 percent. No wonder some analysts are saying that this week’s trim of the fiber sector was a healthy development. “Fiber optics really was one of the last sectors to get hit,” said Steve Milunovich, technology research manager for Merrill Lynch. Like most brokerage analysts, he argued that makers of fiber-optics equipment are poised to remain among the top tech performers due to soaring demand for “fat pipes” to move data over the Internet and corporate networks. “The bandwidth explosion — that is real,” Milunovich said. And unlike many Internet companies, fiber-optic manufacturers have real earnings and profits today. “The technology is more real. The business model is more real,” Milunovich said.