22 February 2011 12:46:07 PM
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By David Chaffee
Even the purest optical bench scientist will admit to at least a dim understanding of the money flowing into and out of the fiber optics industry at any one time. Investment funds provide job security, allow researchers better tools, offer more meaningful travel and better collaborations, increase understanding, and promote efficiency, an ability to do the job, and more opportunity.
Wall Street has been kind lately to optical components vendors. While this attention was keen in the late 1990s and going into the beginning of the century, it has tapered off thereafter. Talk to a Wall Street broker in recent years about fiber optics and you were likely to hear grumblings of “fiber glut” and buyer remorse.
That has dramatically started to turn around and is carrying a buzz into OFC/NFOEC 2011.
This year a good bit of the investment spotlight will be on the optical component vendors. There are several reasons for this. One is that consolidation has left the optical components industry primed with several big players. Another is that optical components vendors often are more pure plays in optical while system vendors, for example, such as Alcatel-Lucent and Cisco, sell numerous telecom technologies.
The biggest news lately is the successful Neophotonics initial public offering. The company has been waiting since last April for conditions to be right and came out with a bang on Feb. 4. The maker of photonic integrated circuits saw its shares double at one point from its initial opening of $11. While that has since come back some on profit-taking, the IPO represents a powerful start for an optical components vendor.
Paving the way have been repeated strong recent gains by optical component companies such as Finisar, Oclaro and JDSU. Wavelength selective switch reconfigurable optical add/drop multiplexers (WSS/ROADMs) has been a particularly high-flying item, as have tunable XFP lasers. Sales of 40 Gbps coherent optical components have been brisk and an enormous market for 100 Gbps is anticipated.
JDSU, perhaps the most watched optical components company on Wall Street, had shares jump nearly 27 percent directly following the announcement of its quarterly results Feb. 3. Revenues accelerated by 16 percent sequentially and nearly 39 percent year over year. The company also registered a solid gain for the quarter.
Finisar reported record revenues and earnings in its most recent reporting quarter. Net income was $33.8 million compared to a loss of $31.4 million in the year-earlier period. Revenues increased by some 16 percent from the prior quarter.
While nothing is perfect and perturbations are expected to occur, including inventory and supply chain issues, and we are a long way from the craziness of a decade ago, the fact that Wall Street again is interested is a good thing for the fiber optics industry and adds to the excitement of the coming OFC/NFOEC show.
Founder/CEO, Chaffee Fiber Optics