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

To: Master (Hijacked) who wrote (13797)	10/31/2000 11:04:34 AM
From: K. Bloomquist	Read Replies (1) \| Respond to of 24042

This story is from 9/7/00, but seems pretty relevant in light of NT's results from last week. Also noted from ALA's conference call that inventory levels are high, the question remains - which inventories? Unless inventory levels are broken down into specific components you cannot draw conclusions re possible double ordering at JDSU/SDLI. If CSCO's optical revenue is up big, as this story indicates is may be, that puts a whole new spin on the slowin optical theory from NT's results. PREVIOUS NEWS ANALYSIS SEPTEMBER 07, 2000 Cisco's Optical Shipments Soar Second-quarter shipment values for the major players in optical networking show some surprises. According to The Dell'Oro Group, the overall market for optical gear, including Sonet/SDH and DWDM short- and long-haul equipment, grew 14 percent to $5.937 billion during the last quarter. But not all players are keeping pace. In fact, individual growth rates for last quarter were so uneven that, if trends continue, market share figures could change. Cisco Systems Inc. (Nasdaq: CSCO), for instance, outstripped all leading vendors in quarterly growth, according to Dell'Oro, despite its position as bottom dog in terms of market share. Another optical player, Ciena Corp. (Nasdaq: CIEN), which Dell'Oro ranks sixth in market share, also seems to be pulling ahead, with 28 percent growth in its sales for the last quarter. In the meantime, optical growth seems to be dwindling into the red for market leaders Alcatel SA (NYSE: ALA) and Lucent Technologies Inc. (NYSE: LU). According to Dell'Oro, Cisco showed a 53 percent increase in sales, doing better than market leader Nortel Networks Corp. (NYSE/TSE: NT), which Dell'Oro says showed 34 percent growth in optical sales for the second quarter. Cisco's been trying hard to bulk up optical sales by acquiring a string of companies, including Cerent Corp., Monterey Networks, Pirelli Optical Systems, and Qeyton Systems. And the strategy seems to be working, at least in part: Cerent has been a hit for Cisco (see Cisco Beats Street, Cries 'Optical' ). "Cisco's doing amazingly well with its Cerent product," says market analyst Scott Clavenna. "They did a good job of establishing it as a next-generation Sonet product at OC48 when everyone else had OC3 and OC12. Also, they're the only vendor shipping a product in volume right now." Whether Cisco can keep the momentum going is open to question, however. For one thing, it doesn't seem to be having the same luck with its other acquired gear as it has with Cerent. (See Cisco Puts New Spin on Pirelli ). For another, the competition is growing, with newbies like Alidian Networks Inc., Atoga Systems, and Cyras Systems Inc. eager to stake their own claims in the coming months. Cisco's also got lots of competition in the routing arena, where Dell'Oro notes it's battling Juniper Networks Inc. (Nasdaq: JNPR). (See Cisco Takes a Dip .) How that fight plays out also could impact Cisco's actions in the optical arena. While some vendors are surging ahead, others seem to be losing ground just as quickly. Lucent, for example, showed a 10 percent reduction in optical growth, even though Dell'Oro says its overall market share makes it the number two player in optical networking. Alcatel is showing a 7 percent loss in growth, according to Dell'Oro. But Clavenna cautions against drawing too many conclusions from the figures. "Alcatel is doing better with its DWDM products. It's not doing as well with Sonet. When you clump all of the optical networking gear this way into a single number, it doesn't tell the whole story." An Alcatel spokesperson also told Light Reading that "Dell'Oro's figures don't take into account portions of the optical transport market such as submarine networking and digital cross-connects, where Alcatel has a leading presence." Lucent had not replied to inquiries about Dell'Oro's figures at press time. -- Mary Jander, senior editor, Light Reading lightreading.com