Courtesy of Pat Mudge on the JDSU thread> This is from AGERE"s S3 filing. Lu seems like a cheap way to get into this area.
We expect to invest approximately $1.2 billion in research and development in fiscal 2001, an increase of approximately 45% compared to fiscal 2000.
Gross margin for the Optoelectronics segment increased from 42.5% in fiscal 1999 to 48.7% in fiscal 2000, as a result of increased sales volume and manufacturing cost improvements.
Capital expenses for 2001:
Capital expenditures were $672 million in fiscal 2000. Our capital spending is used primarily in support of our manufacturing facilities. This includes expansion of manufacturing capacity and enhancement of existing capacity for the manufacture of newer technologies. Capital is also used to purchase equipment to improve yield, increase automation, and increase manufacturing productivity. Additional capital in fiscal 2000 was spent on information technology infrastructure, including computer servers and networking capability. Capital expenditures in fiscal 2001 are budgeted at approximately $1.2 billion. Of this amount, we expect approximately $900 million to be used for the on-going businesses of our segments. In addition, approximately $155 million will be spent in support of a new office facility adjacent to our current corporate headquarters in Pennsylvania. The remaining approximately $150 million of fiscal 2001 capital expenditures will be used for requirements related to one-time costs of our separation from Lucent.
On Market growth:
Within the communications semiconductor industry, we participate in the optoelectronic component and integrated circuit market segments. Dataquest Inc., a unit of Gartner Group, Inc., an independent market research company, estimated in 2000 that the worldwide market for communications semiconductors, which includes both active optoelectronic components and integrated circuits, will grow from approximately $43 billion in 1999 to approximately $81 billion in 2003, a compounded annual growth rate of 17.3%. Various segments of the communications semiconductor industry, however, are expected to grow at different rates. For example, we expect the compounded annual growth rates of the optical components market segment and the network communications and wireless local area networking product areas from 1999 to 2003 to each exceed 17.3%. Because Dataquest does not separately list in their report these growth rates, or include passive optical components in its estimates, we rely on other reports for these growth rates. Ryan, Hankin and Kent, Inc., an independent market research company, estimated in 2000 that the worldwide market for optical components used in communications networks, which includes both active and passive components, will grow from approximately $6.6 billion in 1999 to approximately $23 billion in 2003, a compounded annual growth rate of 36.6%. Based on various industry reports, we estimate that sales of integrated circuits used in network communications equipment will grow from approximately $7.8 billion in 1999 to approximately $19.8 billion in 2003, a compounded annual growth rate of 26.0%. Additionally, based on various industry reports, we estimate that sales of wireless local area networking equipment will grow from approximately $794 million in 1999 to approximately $2.4 billion in 2003, a compounded annual growth rate of 31.4%.
There has been a significant increase in the volume of data and voice traffic throughout communications networks in the past several years. The proliferation of activities such as Internet browsing, electronic commerce, which is the buying and selling of goods and services over the Internet and other electronic media, and video conferencing has led to this increase. Furthermore, the increasing number of employees capable of accessing information and communicating and working from home or other remote locations has also significantly added to the volume of data and voice traffic across communications networks. With this increase in traffic, network services providers have focused on improving the transmission capacity, or bandwidth, and the performance of their networks. This improvement in networks has attracted additional users and new ways to exchange data. It also has resulted in new uses for the exchanged data and an even greater demand for bandwidth. We expect that continued improvements in communications networks and the further development of new technologies through which people can access networks will result in additional increases in data and voice traffic. Ryan, Hankin and Kent forecasted in 2000 that the volume of data transmitted over the Internet, which constitutes a rapidly rising portion of the data traffic transmitted through communications networks, will increase at a compounded annual growth rate of 156% between 1999 and 2003.
Description of their active and passive products:
We are a leader in the sale of active optoelectronic components. An optical network utilizes a number of interdependent active optoelectronic and passive optical components. An active component is a device that has both optical and electronic properties. A passive component is a device that performs its functions only in the optical domain. Generally, active components provide the source, amplification power and modulation to optical networks. Passive components are used to mix, filter, adjust, isolate and stabilize the optical signals in optical networks. Some devices, such as optical amplifiers, combine active and passive components into one product. We describe the functions of active and passive components in an optical network in greater detail below the table listing our key products. We have started to broaden our product portfolio to include passive components. With our acquisition in June 2000 of Herrmann Technology, we now sell passive optical filters used in conjunction with active optoelectronic components in products such as amplifiers. We also have, in various stages of development, a number of silicon waveguides. Silicon waveguides are passive optical components that manipulate optical signals to perform a variety of functions. Some of these silicon waveguides are being sampled by one or more of our customers and we have started to manufacture others in commercial quantities.
Product definitions are excellent. Reading through the specific products, it’s clear that LU’s focus was on 2.5gig and that their 10gig products in many cases are in testing. The same with 40gig.
Backlog:
Our backlog, which represents the aggregate of the sales price of orders received from customers, but not yet recognized as revenue, was approximately $1.9 billion and $600 million on September 30, 2000 and September 30, 1999, respectively. The majority of these orders are fulfilled within three months. All orders, however, are subject to possible rescheduling by customers. Our customers often change their order two or three times between initial order and delivery. Our customers' frequent changes usually relate to quantities or 83 87 delivery dates, but sometimes relate to the specifications of the products we are shipping. Although we believe that the orders included in the backlog are firm, some orders may be cancelled by the customer without penalty. We also may elect to permit cancellation of orders without penalty where management believes it is in our best interests to do so. |
