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

To: pat mudge who wrote (1701)	6/20/2001 11:22:38 PM
From: techanalyst1	Respond to of 3294

Indeed... If Josef Straus is exercising options in the 13 area and selling them, why should shareholders be buying? TA

To: pat mudge who wrote (1701)	6/21/2001 12:40:11 AM
From: puborectalis	Respond to of 3294

'Fiber optics' becomes a four-letter word June 21, 2001 12:00 AM ET by Rex Crum -------------------------------------------------------------------------------- Fiber-optic cable is about the width of a human hair. It's incredibly strong and yet you could crush it if you stepped on it hard enough. That is a perfect description of what happened to several companies in the fiber-optic space this week. It didn't matter if you were a networker that builds fiber-optic transmission systems, a maker of the components used in fiber-optic equipment or an operator of a fiber-optic network -- if fiber optics was in your company's make-up, you got squashed. Ahead of itself Two emotions, hope and fear, have driven growth in the fiber-optic business. About 100 million miles of fiber-optic cable have been put in the ground in hopes of luring customers to their networks. At the same time, all that fiber was laid because … well, if Company A didn't get there first, it was afraid Company B would eat its lunch. Either through hubris or naïveté, officials with many fiber-optic related companies felt there would be no end to the desire to invest in fiber-optic technologies. But like everything else in telecom, the bottom fell out. Some analysts have said there is now a 10-year excess supply of fiber in the ground, and only about 5 percent of that is even "lit," or in use. Fiber-optic network operators have only a fraction of the revenue-generating traffic they expected running across their networks. And the equipment makers are finding that they have giant warehouses full of gear that the carriers don't need. In a nutshell, the fiber-optic guys learned this week that they are not immune to the sector slowdown. Nikos Theodosopolous, an analyst at UBS Warburg, described the problem in a recent research note. "We believe as several alternative carriers and C-Lecs are defaulting or slowing down their buildouts, it is leading to 'virtual inventory' at major telcos. This 'virtual inventory' is in the form of equipment telcos bought for co-location and interconnection to these C-Lecs, that is now underutilized," he wrote. (CLECS are competitive local-exchange carriers.) Theodosopolous' comments came in an assessment of Tuesday's earnings and revenue warning from Tellabs (TLAB), a maker of optical networking, switching and broadband access gear. Tellabs warned second-quarter revenue would only come in at $500 million -- up to 39 percent less than previous estimates of between $780 million and $820 million -- and earnings per share would likely be break-even, as opposed to earlier guidance of 26 cents a share. By the end of trading on Wednesday, investors showed just how much confidence they had in Tellabs by chopping 24 percent off the company's stock price. Surrender All around the fiber optics industry, it seemed, companies were running up the white flag of surrender and admitting there will likely be no second-half turnaround, as they had hoped. Jozef Strauss, the beret-wearing chief executive officer of JDS Uniphase (JDSU), the largest maker of fiber-optic components and a big supplier to Nortel Networks (NT) and others, said his company's business downturn had been "rapid, steep and unprecedented, and the continuing lack of visibility from our customers suggests to us that a cautious outlook continues to be warranted for the short term." Strauss had the numbers to back up his pessimism. JDS lowered its fourth-quarter 2001 revenue and earnings estimates from $690 million and 5 cents a share to $600 million and a loss of 6 to 8 cents a share. It doesn't look to get any better any time soon, as JDS expects its first-quarter 2002 revenue to come in at $450 million. It's a slowdown no matter how you slice it. Robertson Stephens analyst Paul Johnson expects that incumbent U.S.-based telecom carriers will reduce their capital spending to 19 percent of revenue by 2003. That's a nearly 30 percent drop off from the 27 percent figure that was reached in 2000. "The trend of carriers growing their capital expenditures faster than their revenue is clearly unsustainable in this environment," wrote Johnson in a research report. Gloom from all Telecom equipment makers and service providers were extra gloomy this week. Leave it to Nortel, the world's biggest maker of telecom equipment, to launch the biggest salvo with its warning of a $19.2 billion quarterly loss. (See "Nortel drops warning bomb.") Fiber-optic network operator and service provider Level 3 Communications (LVLT) announced that because there isn't enough traffic running thorough its network, it isn't making enough money and there will be fewer people working there soon. (See "Level 3 CEO says worst is here.") And what week would be complete without some drama from Lucent Technologies (LU)? Its stock price hit an all-time low of $5.04 a share on Wednesday, and its debt rating was reduced to "junk" status. Oh -- and its plan to sell two plants to Flextronics (FLEX) for a much-needed $1.5 billion reportedly fell through. (See "Lucent's future unclear as deal falls through.")

To: pat mudge who wrote (1701)	6/21/2001 11:05:31 AM
From: Jack Hartmann	Read Replies (1) \| Respond to of 3294

Hi Pat, Nice Post. I went to a small company that degreases the end of a fiber optic cables. Apparently in order to splice a cable and attach a connector the ends must be free of insulation residue. They remove the black insulation and soak the glass fibers in perchloroethane. Huge reels of cable with only the end being treated. Looked busy. Maybe a sign that the fiber rollout is still going, albeit slowly. One commented that the techs in the field use diesel oil which is a poor substitute. I haven't seen the FO splices or connections yet, but I have to believe they must be very sensitive if this process needs to be done. Jack

To: pat mudge who wrote (1701)	6/21/2001 1:04:09 PM
From: FR1	Read Replies (1) \| Respond to of 3294

Pat - Nice post. My feelings exactly. I notice in the WSJ article and others that everyone is building this perception that the entire nation has a glut of fiber. All of the articles seem to skip two points: 1) There was this thing called the FED that pushed interest to the sky and caused a great deal of our misery. They are going the other way now. We will have to scavenge the bodies of the dead and rebuild but the direction is now toward recovery. 2) How can these guys write about all the glut when the metro market has not even started? They make it seem like digging a trench between two towns is all there is to the broadband fiber industry. Investors are left with the impression that all the work is over and anyone that wants a fiber connection can just pick up a phone and ask for one. Incidentally I saw Strauss interviewed (always referred to as "the beret-wearing chief executive officer of JDSU") and I have to say (IMHO) he is a not a good person to put in front of the camera. If you made a list of all the things you should not do for public presentation he would have every one of them. I can't understand why JDSU doesn't see that and either train him or put somebody else in that position. I like your updates on JDSU and hope you keep giving them.