BKHM
Finisar – FY09 Revenue Outlook
Finisar’s Q408 Earnings Call was June 12. Since then the stock has declined nearly 25%, reflecting what we believe is a general dissatisfaction with revenue growth guidance of 10-15%. This guidance appears conservative.
Optical Component Consolidation - Part I
Just as the market abandoned hope of consolidation it strikes. The dust has settled from the merger announcement between Finisar and Optium and in plain terms it is a brilliant move. Finisar is already a leader in the industry but this puts them in an even stronger position than before. This series of posts looks at why it is happening, who benefits, who loses, and suggests what is likely to happen next.
Infinera - The Optical Component Company That Wasn’t
Infinera (INFN) had a very successful first day of trading after seven years of working counter to the popular and misguided beliefs of a Gilderesque all optical future.
Great controversy surrounds the company and investors wonder whether the valuation attached to company is justifiable. The valuation is indeed debatable and is predicated on their success penetrating the PTTs & Bellcos.
Cornering the Commodity Market
The most under-reported but most significant announcement at OFC2007 was Finisar’s (FNSR) Fiber to the Home (FTTH) product. Most optical vendors are communicating their intent to NOT make a product for FTTH or Passive Optical Networking (PON) applications. When the worlds highest volume optical module supplier decides to go the opposite way, something noteworthy just happened.
Nortel, Corning, and the $100B Deal That Wasn’t
Jerry Rawls, CEO of Finisar (FNSR), recounts the talks between Nortel (NT) and Corning (GLW) to sell Nortel’s optical component business. This is a hallmark story of the bubble.
Why JDSU Bought Picolight
JDSU (JDSU) announced that they are acquiring Picolight, a maker of VCSEL based optical transceivers. This is yet another example of healthy consolidation in the optical components business, which ultimately will lead to a better business environment for all- except for the customers like Cisco that exploit the oversupply situation. And Cisco is the likely reason JDSU bought Picolight in the first place.
Dr. Strangelove, Or: How I Learned To Stop Worrying and Love Huawei.
I know two American engineers who have relocated to China to lead optical module design teams at Chinese equipment companies. They live and work in China for Chinese companies, using their skills to build custom modules - skills no longer in demand from their American Tier-1 telecom equipment employers.
What’s Going On in Optical
OK, since I’ve been called out by Om Malik, I’m going to let rip with a stream-of-conciousness monologue on optical. No backspace key, no delete key, spelling corrections ex-post-facto. Here goes.
Finisar Zealots Leave the Island
It looks like the cleansing of the optical component sector is nearing completion. This is something I have been waiting for in expectation of a more rational investing environment in which I can apply my principles and philosophies. As readers know, I own no optical component stocks (yet). I strongly suggest you read my post in the previous link. Here’s an excerpt:
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Bookham CEO on Optical Industry Models
In a stroke of timing that a few people have pointed out cannot be a coincidence (and I can assure you it is) Bookham Inc (BKHM) CEO Giorgio Annania pens an article for CompoundSemiconductor.net about the future business models of the optical component industry and what role he intends for Bookham to play. I recently published my thoughts on the impact Chinese manufacturing might have on the business, and the benefits and risks of Bookham’s vertically integrated model when applied to lower volume telecom businesses.
The article revisits the well known fact that there are too many suppliers in the optical component business and that there needs to be consolidation.
Hat tip to FiberDeviceBlog
Bookham, China, and the Optical Component Market
Recently, I sat down with Giorgio Anania, CEO of Bookham Technology (BKHM). We discussed a number of things, including the emerging competition of Asian optical component manufacturers. My conversation with him was about the industry in general, and not specific to Bookham.
We like to identify macro technology trends and disruptions then determine the best way (if any) to invest in them by following up with individual technical (as in technology, not charts) and financial analysis. Discussions with gentlemen like Giorgio Anania help me start this process. At this time I’m far from finishing it.
One trend I see unfolding is the emergence of Chinese optical component companies. Every company is moving their labor intensive component manufacturing to Asia (including Bookham) either through outsourced manufactuing or directly owned facilities in low-cost labor areas.
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Why I Don’t Own Optical Component Stocks (yet)
A common question I receive is “What optical component equities do you like”.
My answer is pretty simple.
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Intel’s Communication Group - Destiny Fulfilled
Intel corp (INTC) lands on Page A1 of the WSJ with a story covering their Analyst Day presentation in New York yesterday. The big news that is getting widespread coverage in many media outlets- including BusinessWeek - is that they are cutting $1BB (8%) in spending but without across the board job cuts.
The big problem is Intel’s work force grew 17% in the last year alone. So, the obvious path is to find businesses with high costs and low revenue, and spin those out to people who can manage them tighter. It sounds like this is exactly what Intel plans to do.
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