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Technology Stocks : SDLI - JDSU transition -- Ignore unavailable to you. Want to Upgrade?

To: pat mudge who wrote (361)	2/23/2001 6:57:48 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 3294

ottawacitizen.com JDS boss expects growth in fibre-optics Straus predicts optical gear will grab 64% of market of next-generation systems Bert Hill The Ottawa Citizen JDS Uniphase chief executive Jozef Straus said yesterday that spending on fibre-optic technology will grow quickly, even if overall telecommunications spending slows dramatically. In a speech to technology industry executives at the Corel Centre, Mr. Straus said optical gear is grabbing a bigger slice of telecommunication spending because it provides the answers to the financial squeeze hitting the industry. "I firmly believe that there will be strong growth," he said. Still, JDS is facing radically different market conditions than a few months ago. After growing at more than 100 per cent annually for several years, JDS sales growth has suddenly tumbled into the 25-per-cent range. Looking at a presentation slide showing lions in the coliseum, he joked, "I don't know if I'm the gladiator or getting eaten alive." Certainly, JDS has had its share of trouble lately, with 700 layoffs, a tumbling stock price and soured deal with Nortel Networks over a $3-billion Swiss optical plant. But Mr. Straus had nothing to worry about from his audience, which happily donned copies of his trademark black beret and applauded his remarks. Later, Mr. Straus hinted during a media scrum that JDS might seek some compensation from Nortel. JDS saw the value of the $3-billion Swiss deal plunge by 33 per cent when Nortel slashed sales forecasts two days after the deal closed. Nortel and other public companies are subject to securities laws to make full and timely disclosure of its changing business prospects. Questions are being raised whether Nortel chief executive John Roth inadvertently tipped his hand in an interview with clients of a Toronto brokerage shortly before issuing the new guidance. The situation has triggered shareholder lawsuits and complaints to regulatory bodies. Asked if JDS would press Nortel for compensation, Mr. Straus said, "We have to find out what choices and options we have." However, he reiterated the JDS position that it will not sue Nortel, its biggest customer with more than 15 per cent of sales. In his speech, Mr. Straus said that carrier spending has slowed dramatically because the revenue from the wave of Internet traffic has fallen behind the cost of providing the new equipment. Mr. Straus said revenues per minute of network use have fallen 33 per cent in the last five years. The share of carrier revenues spent on networks has almost doubled to 16 per cent in the same period. He said carriers have slashed spending plans in the last few months as outside capital dried up. He said the new optical gear will sell because it provides a path out of the industry's dilemma. It will increase capacity, provide new revenue-generating services and reduce operating costs. He predicted the fibre-optic share of telecommunication spending will grow from just 28 per cent of existing systems to 64 per cent of next-generation systems now being installed. JDS has predicted that telecommunication spending increases will decline from more than 20 per cent in 2000 to less than five per cent this year, and spending on optical products will increase 40 per cent to $16.2 billion in 2001.