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Technology Stocks : SDL, Inc. [Nasdaq: SDLI] -- Ignore unavailable to you. Want to Upgrade?

To: Tulvio Durand who wrote (211)	4/28/1999 2:20:00 AM
From: pat mudge	Read Replies (2) \| Respond to of 3951

I missed the IBD today but will see it when I get home on Thursday. Okay, now, the Q&A from CC: Q: Guidance for gross margins? A: Impact from Corning (preferred customer reductions) will off-set high-yield DWDM margins. We'll see improvements, but not as drastic. Q: Competition in stabilized modules? A: Not much yet. Others are trying to qualify. We have best power, reliability, and stabilization. Others are having trouble with stablility at higher powers. Q: What percentage is coming from Corning contract? A: Same in Q1 as Q4 in terms of %. Q: Reactor numbers? [referring to production] A:: We'll need capacity by 2000. Q: Utilization in Q1? A: Chip level was under capacity. Reactor level had no limitation for current demand. . . . fiber module capacity restricted now --- going to 7/24 in Victoria in Q2. Q: What about source lasers? A: Not actively in high production. . . looking for spot to differentiate. Q: Possible acquisitions. . . what types of technology? A: IOC is a good example of type we'd acquire. We needed lithium niobates for this rapidly growing market --- gave us synergies with our customers. We'd broaden our product space. Q: Revenue guidance going forward? A: We're comfortable with analysts' 10% sequential. Q: LU said shortages in certain components. Any constraints? A: We delivered considerable amount, at times they wanted more, constrained on packaging. Q: Satellite programs? A: Winding down. Q: Communications continue to increase? A: Yes, every quarter. Q: R&D? A: 9.4% of sales is within normal range. 9-10% is right level. Up 35% y/y. Up 75% for DWDM. Q: Undersea programs? A: 4-year agreement with Alcatel. Two other large potential customers --- using higher channel count, so need higher power. Q: Gross margins --- impact of long-term contracts --- how many of top 6 are under similar contracts? A: Four. Q: Undersea boosts gross margins. Are yields as high as terrestrial? A: Lasers take more testing, so yields are lower and costs higher for customer. Q: Capacity in Victoria? A: Three shifts in Q1, now going to 7 days a week, 24 hours a day. Q: What stage is 1/2 watt chip? A: In production by end of '99. Q: Cable TV market? A: It's much ssmaller. We don't break it out. Q: JDS a large customer? A: Yes. We have a good long-term contract. Q: Metro market targets? A: Regarding electro-absorption, no plans to introduct products. The demand is for pump lasers and amplifiers for metro market. Q: Growth in Europe, does this include OEMs? A: Yes, to OEMs. Don't know if it stays in Europe. Q: Are you seeing DWDM take off in Europe? A: Yes! Q: Tunable lasers? A: 1550 nm range, tunable over complete band. Used for scientific instruments. Working on products for communications space. Q: Improvement out of long haul? A: Yields are coupled with production specifications. Higher power equals lower yields. If constants were specific (which they're not), yields could rise, but that's not the market. Q: What % for submarine and expectations? A: Less than 5% in Q1. Growth depends on what % fiber cabling business can access, specifically Alcatel and if we get chosen by other two potential customers. Good chance, but we don't know. Won't be less, could be substantially more. Q: CableTV as %? A: CATV not as high as long haul and submarine. ATT/TCI deal indicates there will be a lot of deployment. We're well-positioned. Q: Increased manufacturing? Is there enough packaging capacity? A: Yes. In Q2. Q3 we'll turn on some facilities. Will squeeze more in existing facility and increase yields. Q: Victoria building is done, you need to hire and be qualified by Q4? A: As we work with 2 submarine partners, they'd need substantial chips. [Not a non-sequetor. Question: will you have factory qualified by Q4? Answer: we'll have to due to customer needs.] The mystery of the two submarine customers stands out like a giant in a crowd of pygmies. Or, perhaps it's my curiosity that's the giant. With such a dynamite quarter, it'll be fun to watch how the Street reacts. Pat

To: Tulvio Durand who wrote (211)	4/30/1999 12:29:00 PM
From: pat mudge	Respond to of 3951

IBD article from April 27, 1999, by Clifton Linton. I couldn't find it online, so will transcribe in part: "Outer space and the ocean floor are tough places for phone repairmen to reach. Yet those are the environments where phone companies are laying their lines as they expand their global networks. So that means they must use equipment that's reliable and lasts a long time. One vendor these telecoms turn to is SDL, Inc. The company makes pump laser chips, which amplify signals in transoceanic fiber-optic cables. The products have a 100-year life span. SDL's pump lasers won certification for underwater use in February. Later that month, French telecom equipment maker Alcatel agreed to use the devices in its amplifiers for undersea cables. [4-year exclusive] And that may be just the beginning. Eventually, undersea components could account for 20% of SDL's sales, says analyst James Jungiohann of CIBC Oppenheimer Corp. . . The exploding demand for telecom capacity, fueled by the growth of the Internet, is forcing phone companies to look for more efficient ways to use their networks. That's overwhelming high-capacity fiber-optic cables. Phone companies found they could handle more traffic by sending signals through cables using different colored lasers. For instance, a red laser might send data signals, while a green laser sends voice signals. In this case, the cable's capacity is doubled. Telecoms want to use the entire light spectrum to get even more channels. Lucent Technologies Inc. now builds fiber-optic equipment that handles 80 channels. It plans to launch gear with 160 channels in 2000, says analyst Sean Chaitman of Jesup & Lamont Securities. SDL's pump lasers plan an important role in this process. As a signal passes through a fiber, it fades with distance. The lasers boost the signal so it travels farther before fading. AMplifiers typically are needed every 50 miles. For use on land, pump lasers need only have 20-year service lives. But because they are harder to reach thousands of feet under water, telecoms require undersea devices to last five times as long. Such pump lasers should command two to three times the price of their dry-land counterparts, Jungiohann says. [Numbers listed didn't include latest quarter, so I'll skip.] SDL signed an 18-month contract this month with Corning Inc., one of the world's largest suppliers of fiber-optic cable. SDL should provide more than half the pump lasers Corning buys over the next 1 1/2 years, Scifres says. Though he wouldn't give specifics, he says the contract is worth millions of dollars. SDL also sells components to Lucent, 'We are getting orders from the major players in the industry,' Scifres said. But demand for pump lasers is currently exceeding SDL's supply. So the company is adding 40,000 square feet to its manufacturing plant in Victoria, British Columbia. The addition, expected to cost several million dollars, should be completed in the fourth quarter. SDL also is growing through acquisition. In March, SDL agreed to buy U.K-based IOC International PLC for about $50 million in stock. IOC makes modulators used in fiber-optic systems. 'This will broaden our product line and give us a presence in Europe,' Scifres said. In February, SDL paid $5 miullion for Polaroid Corp's fiber laser business. [For technology jointly developed.] . . . SDL does face some stiff competition,k however. Its main rival, Uniphase Corp., plans to merge with Canadian equipment maker JDS Fitel Inc. The combined company is expected to become an industry powerhouse. In the short term, 'I don't expect it to be a problem,' Chaitman said. 'But in three to five years, it could become a factor. It's likely that within the next couple of years SDL will do a strategic combination.'"