communication industry
One hundred and twenty five years ago in 1876, Alexander Graham Bell, invented the telephone. With this invention the communications industry originated. The following 125 years have seen an evolution of communication equipment, lead by Bell Laboratories, now the Research and Development department of Lucent Technologies. The three segments of this industry growing at the fastest pace include optical networking, wireless, and access equipment. This paper will analyze the optical networking segment in detail. Bell Laboratories first developed fiber optics in the 1970's. The equipment transforms electronic signals into light that is pulsated by lasers through fiber-optic cables, which consist of thin glass fibers. The first full-service fiber optic telephone system was located in Chicago during the late 1970's. Today, nearly all long distance traffic is carried through fiber-optic cables. The clear growth driver of the optical segment is dense wavelength division multiplexing (DWDM) systems. These systems are projected to grow between 50% and 60% in 2001. Breaking this down even farther finds growth projections of 56% for long-haul systems used to carry
Rather, it was temporarily caused by the company's addition of manufacturing capacity. Lucent failed to see this change occurring and consequently became hampered with outdated inventory causing their loss of market share last year. By acquiring SDLI, JDSU acquired the leading technology of pump laser and amplifiers. Investors in this area saw heavy losses during the previous year, but I consider now to be an excellent buying opportunity for growth focused investor. The third factor is integrating acquisitions. Fiber Optic Equipment MakersInterestingly, there are only a two suppliers of optical components, JDS Uniphase and Corning. Companies who successfully integrate their acquisitions will continue to grow rapidly with outstanding performance. Despite the additional capacity generated by optical equipment, carriers are not fully satisfied with the current efficiency. Although this process takes only microseconds, it does slow the network. At this point, manufacturing is still done largely by hand, as automated production capabilities have yet to be invented. As consolidation sweeps across the industry, it is widely believed that the easiest way to grow is simply by acquiring technology then through internal development. It is in the transition between pioneering and growth stages. In an effort to concentrate their focus as a service provider, Lucent, spun off its enterprise division and plans on spinning off its microelectronic business as well. The OC-192 should account for over 40% of transport revenue by year-end, compared to 32% last year. Standard & Poors believes that 2001 will shape up as another strong year of profit growth for equipment suppliers.
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