Optical components market on course for growth, say RHK analysts

8 January 2004 San Francisco, CA Lightwave -- According to new research by RHK Inc., revenues in the global optical component market were up 8% in the third quarter of 2003, underscoring the long-awaited stabilization of the market and confirming that the market is finally poised for growth. Revenues show a marked improvement--from $469 million in the second quarter of 2003 to $509 million in the third quarter.

Jan 8th, 2004

8 January 2004 San Francisco, CA Lightwave -- According to new research by
RHK Inc., revenues in the global optical component market were up 8% in the third quarter of 2003, underscoring the long-awaited stabilization of the market and confirming that the market is finally poised for growth. Revenues show a marked improvement--from $469 million in the second quarter of 2003 to $509 million in the third quarter.

On a rolling four-quarter basis, the market share leaders changed dramatically. JDS Uniphase and Agilent are in a virtual tie for first place, with JDSU narrowly maintaining its lead with 15.2% market share. According to the report, JDSU's nearest competitors--Sumitomo (8%), Finisar (7.3%), Bookham (6.9%)and Infineon (6.7%)--offer limited competition today; each company sells around $30-40 million each quarter. Other market leaders include Mitsubishi, Furukawa, and Avanex. Companies with strong exposure to the datacom market, such as Infineon, Finisar, and Sumitomo, have seen the largest quarterly gains in market share.

"Growth trends for the market during the first half of 2004 point toward modest, single-digit growth now that the market seems to have bottomed and is stabilizing," reports senior analyst Brenna Hawtof. "This is largely due to the fact that carriers are focused on financial stability and are carefully evaluating next-generation networks before committing to building them."

RHK expects the optical components market in 2004 to be affected by the following trends:
” Continued industry consolidation for both vendors and service providers
” Pricing stabilization in some markets, such as in DWDM modules and SONET/SDH transceivers
” Pockets of growth, such as in datacom market segments Gigabit Ethernet and Fibre Channel
” Risk-averse behavior by service providers who are using free cash flow to reduce debt rather than upgrade their networks.

For more information about the report, "Global OC Market Up 8%, On Course for Growth," visit www.rhk.com.

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