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

To: gbh who wrote (977)	4/1/2001 4:22:10 PM
From: OWN STOCK	Read Replies (1) \| Respond to of 3294

gbh: Although overall, I like the article, I also have troubles with it, and the introduction, as follows: the assumption in the intro that heritage telecomm capex spending is the only source of capex for fiber optic components. First, I agree the heritage telecomms are in bad shape, mostly because of heritage equipment: Copper and old fiber (Sonet, 1300 nm, switched lines, etc), and partly because of their customer base: John and Jill farmer in Nebraska who call once a week, maybe, on their lifeline rate dial phone. What makes it possible for the competitive pressure to be so high in the first place? Two words: Heritage Fiber. What will make it possible for them to survive in the future? Two words: New Fiber. The money spent by consumers and business for communications is so high, that a small advantage for a service provider can lead to tremendous cash flows, and market ownership. That is still true, even in this market. As it stands, (heritage) companies with technical and or market disadvantages try to offset them with lowered prices. This cannot be sustained. They will only get sustainable advantage from the latest equipment and the right customer base. Realize: stuff that is going into the ground today was probably designed five (or more) years ago and is therefore over six generations out of date...and may only be an overlay backward compatible patch for capacity...this is why CSCO is writing off inventory...excellent news for the component sector IMO! Kind of like trying to make a business today out of Intel 286's...(remember them?) Speaking of which... I would say that most of the heritage computer company names you might have grown up with (assuming you are over 40) are now essentially or literally defunct (IBM, Rand, CRC, Cray, etc). New companies rose up to take their place: Compaq, Dell, Sun, Apple, etc...all based on the latest chips...when everyone was predicting the demise of the whole sector due to what I remember as a very comparable business situation back then (capex issues, cutting margins, fuel crisis, etc). If only I had bought Intel stock back then (sigh).... Yesterday it was the big-name DOW mainframe versus that pesky toy-like NASDAQ microprocessor, today it is Copper and Sonet and switched services from the heritage companies (with all their Capex woes) versus VoIP on new fiber from start-ups. That is the equation that will drive this stock (and Capex in this sector) forward, without a doubt. Given that, when would you like to invest, and with what style? Short it? Spin flip? Pump and dump? Wait for it to go up then buy? Not for me...I am not going to miss my chance this time...long JDSU...long (fiber component) tech... -Own