>SDLI on squawk box tomorrow morning.
for the benefit of the board, here's the transcript. you can also get the aud & vid replays at:
mktnews.nasdaq.com\\www\nasdaq\news\msnbc\1998\12\17\NASDAQ_0940_17097.htm&usymbol=SDLI&logo=True&companyname=SDL%2C+Inc%2E
SDL (SDLI) Chairman and CEO Donald Scifres expounds on the company
CNBC - SQUAWK BOX
SDL CHAIRMAN AND CEO DONALD SCIFRES
DECEMBER 17, 1998
ABSTRACT: Scifres says SDL makes semiconductor laser products, which enable the transmission of information over the Internet through telephone and fiber optic backbone systems. Scifres says the telecom business is growing faster than expected, offsetting a sluggishness in the rest of his business.
Mark: As a leading manufacturer of semiconductor lasers and integrated circuits, SDL helps telecom and electronic companies increase carrying capacity. Following better than expected earnings reports from competitors in the field, shares of SDL up 7 points yesterday, 20%. Right now they're down 2 3/8 at 39 1/2. You can see the range there. Joining us now from Stanford University to tell us more about his business, SDL Chairman and CEO Donald Scifres. Good morning, sir.
Good morning, Mark.
Mark: Let's explain first what it is your company makes. It makes semiconductor opto electronic integrated circuits. What is that as opposed to any other kind of electronic circuit?
Yes, these are semiconductor laser products, which service the transmission and enable the transmission of information over the Internet through telephone systems and fiber optic backbone systems that service a wide variety of communication requirements.
Mark: So if I were using a technology that used optics instead of electrons, photons instead of electrons, such as that which flows through fiber optic cable, your products are those that I would need somewhere along the way?
Yes, our products are incorporated in fiber optic systems, in fact primarily in fiber amplifiers, which increase the light signal level in the fiber optic communication network.
Mark: Now, this all sounds rather exotic to me.
Then I read about your contracts, and meaning no offense, but the contracts at least that I've seen have been for relatively small amounts of money, three years, $1.25 million contract for Defense Advance Research Projects Agency. Another one with Lucent for maybe a couple million dollars. How much do your products sell for?
Each product typically sells for several thousand dollars, they are often purchased in significant volume, however, especially as we move forward and are beginning to see the impact of a particular new technology in the market, called wavelength division multiplexing.
Mark: I was going to speed us along that path. You make really, you have two different businesses. And it seems clear from what Wall Street is saying that the telecom business is growing faster than expected, offsetting a sluggishness in the rest of your business. Is that a fair assessment?
Yes, it is. The telecom business and especially the area of wavelength division multiplexing, for example last year increased by about 100% year over year. So our telecommunications business is increasing quite rapidly.
Mark: Now, I'm struck by the fact that Wall Street analysts, who around here we call penguins, seem to have gotten this wrong. Back in September, as a matter of fact, Soundview Financial was downgrading their short-term investment rating. Other analysts were downgrading, they expected your earnings to be flat, yet you came in with much better than expected results. Were you also caught by surprise? Was this surge in telecom something you didn't quite anticipate fully either?
No, in fact our strategy has been to really focus on the telecommunications sector of our business, and in fact I think now our strategy is paying off in that area as we're seeing advancing earnings.
Mark: And who are your competitors?
In this wavelength division multiplexing area our prime competitor or primary competitor is Uniphase Corporation.
Mark: What advantage, I'm a customer, why should I buy your product instead of theirs?
We believe our product has three differentiations, higher power, better reliability and better wavelength control and we think our customers really prefer our product.
Mark: So the future of your company is telecom, as you see it, right?
Yes, that's right. We're seeing substantial growth over the past year in that area, and we expect to see continued growth in the future.
Mark: Mr. Scifres, we wish you the best of luck.
Thank you.
Mark: That was Donald Scifres, chairman and CEO at SDL. |
