Sowing the seeds of the next boom

Sept. 1, 2001

Things are tough all over-or at least that's what you'd think if you talked to as many people as I do in this business. In the United States, revenues are down, market capitalizations are crumbling, venture money is harder to acquire, and no one knows when the carriers will start spending big money again. Meanwhile, companies outside of North America rue the shrinking of the world's largest market and wonder whether-or when-the infection that has slowed the United States will reach their borders.

Managing expectations becomes a full-time job in this kind of environment. I spoke to the president of one optical-networking company that, brave lads and lasses, was planning an upcoming IPO. He revealed that several of the younger members of his company "think the last two years are the real world"-which means, like the first riders of the dot-com balloon, they equate the term "IPO" with the phrase "instant millionaires."

For the company president, educating his employees on what is reasonable to expect in times like these becomes a challenge and a necessity. I think the same holds true for the entire optical industry. Life is unlikely to ever be as rosy as it was last year; however, it is equally true that the comparatively harder times we are now experiencing won't last forever.

Those with more than a few years of experience in optical communications have seen this kind of ebb and flow before. But even people new to the business can see signs that the dark clouds aren't here for good. For example, one salesperson told me today about the troubles his company has experienced because his customers are cutting back on their orders. Dollars per order are way down, he said, which meant revenues weren't growing the way they had been. But revenues remained flat. Why? Because the total number of customers has continued to grow. An expanding customer base is always a positive sign. When the optical economy picks up, that salesperson's company is in great position to grow along with it.

Meanwhile, while venture capital is indeed harder to find than before, it hasn't disappeared completely. You can find several funding announcements in this month's "Industry Update" section. There are still people who believe in optical communications and remain willing to back up that belief with cash. Yes, you have to sharpen your story to get that funding, but the result is a healthier set of companies with better technology.

And speaking of improved technology, research and development continues at companies large and small. Cost savings and improved efficiency are the current watchwords, which again means that carriers will find better products waiting for them when spending cycles turn upward again.

Even in times like these, one can see the first stirrings of the next rise of the optical industry. It may not arrive tomorrow but it's coming-and the companies that have used this period to properly position themselves to catch that wave will ride high for a long time.

It gives me great pleasure to announce that Carolyn Mathas has joined Lightwave as a senior editor on the West Coast. Carolyn will solicit, edit, and write Special Reports and Features; research and write news stories; and attend trade shows and other industry gatherings. Carolyn can be reached at 831-335-0711 or at [email protected].

Stephen M. Hardy
Editorial Director and Associate Publisher
[email protected]