fuer Leute, die ebenfalls in diesem Bereich investieren moechten und eventuell Interesse an einem Ueberblicksartikel zum Fiber-Optic Markt haben moechten:
Monday August 28, 2000 (4:28 pm ET)
An Embarrassment of Riches for Fiber Optic Stocks
By Ari Bensinger, S&P Telecom Equipment analyst
NEW YORK, Aug. 28 (Standard & Poor's) - One of the fastest growing segments of the communication industry is optical networking. By some estimates, Internet usage is doubling every six months. Additionally, the demand for bandwidth is increasing with the rising popularity of richer multimedia applications.
To handle this insatiable demand, telecom service providers are buying optical technologies that allow data to be transported in greater volume and over longer distances than current electrical technologies. According to the MultiMedia Telecommunications Association (MMTA), spending on fiber optic equipment is projected to rise from $12.2 billion in 1999 to $28 billion in 2003, a compound annual growth rate of 23 percent.
Since the technology is relatively new, there are only a few suppliers of optical cable, equipment and/or components in this rapidly growing field. This dearth has led to impressive valuations for these companies' stocks. But, unlike some high-flying Internet companies, the optical component makers are actually making money, and their typical business model boasts gross margins above the 50% level and net margins in the 20% range.
In fact, to increase shareholder value, some of the large-cap optical network system makers are trying to separate their component operations. Lucent Technologies (LU) plans to spin off their microelectronics business by December, and Alcatel ADS (ALA) is creating a tracking stock for its optical business. Nortel Networks (NT) was recently in talks with Corning Inc (GLW) to sell its optical-parts unit for more than $100 billion, and is considering spinning the unit off.
While valuations of many firms that sell optical components may seem outlandish, the importance of this market segment cannot be overstated. Although fiber-optic cables today are primarily deployed in long-distance networks, many experts predict that in the future, fiber will be installed closer to homes and businesses. As fiber moves to the edge of the network, the demand for optical components could easily surpass any previous forecasts.
But, how do you pick a company in which to invest? Obviously, with product demand not being an issue, execution becomes the defining variable that will distinguish the leaders from the pack. Below we discuss some key success factors in the fiber optic component sector.
Production capacity
The component market is supply constrained. As network equipment vendors are unable to keep up with their internal demand for components, they are procuring components from external suppliers and even from their competition. As a result, orders and backlogs for component companies are at record levels - they are shipping everything they can make. To meet the booming demand, component makers are spending billions of dollars to ramp up production capacity by adding square footage and personnel and by making acquisitions. The companies that ramp up production the quickest will thrive in this supply constrained environment.
Manufacturing efficiency
Due to the youth of the optical industry where standards have not been established, new ways of automation have not been invented yet. Optical components are made of many complex materials and product assembly is largely done by hand. Also adding to the problem is that as optical technology progresses, i.e. more channel counts are added, the quantities along with the performance level of the parts increase. The companies that automate their manufacturing procedures first will have a significant competitive advantage over their peers.
Integrating acquisitions
Consolidation is sweeping across the optical industry. It is often more efficient to grow by acquisition rather than internal development. In the ever-changing face of optic standards, time to market is critical. Companies are using their strong currency to acquire promising technologies, bringing that technology to market faster than it would have taken to produce it in house. Acquisitions can also add instant manufacturing capacity. Additional capacity was one of the key drivers that fueled the proposed mega combination of JDS Uniphase Corp (JDSU) and SDL Inc (SDLI). With more consolidation expected, successful integration will be a key factor in assessing the extent of a firm's external growth.
Transition to modules
System equipment makers want to bring their systems to market as quickly as possible, and they want to concentrate on their core competencies of helping carriers run their networks. As such, the trend is shifting towards buying integrated products, or modules, instead of individual components. Component makers will need to broaden their product line internally and externally to benefit from this trend. The move to modules will create a more profitable business model for component makers, as modules retain higher margins than individual components.
Our picks
For now, we expect all the sector participants to prosper in this opportunistic environment. For the long-term, though, our top picks are JDS Uniphase and Nortel Networks, which we believe are best positioned to meet these key success criteria. They each have broad product lines, extensive expansion plans and aggressive acquisition strategies.
28-Aug-2000 16:28:03 (03001353) Copyright 2000 Standard & Poor's Investment
Es waere schoen, von Euch Kommentare zu den hohen Bewertungen der einzelnen Titel zu erhalten. Prinzipiell habe ich immer einen Anlagehorizont von ueber einem Jahr, so dass ich an Trades nicht interessiert bin, sondern an einer stetigen Aufwaertsentwicklung der Werte im Depot :) .
Ciao Ami |
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