Agilent Technologies Inc. (Palo Alto, CA) unveiled its new platform at the Optical Fiber Communications Conference and Exhibit 2000 last week in Baltimore. Called the Agilent Photonic Switching Platform, the technology is capable of routing communications traffic without the costly conversion from photons to electrons and back to photons. This ability to manage communications traffic in the optical domain is considered essential for the next-generation all-optical network. By eliminating the equipment needed to translate the basic light signals into electrical signals for the purpose of routing those signals, significant improvements in capacity and reductions in cost can be realized
The news precipitated an explosion in the company's market value from $48.8 billion to $71.9 billion at market close on the day of the announcement. Agilent shares closed at $108 per share on Friday, March 3. On Monday, shares reached a high of $161 before closing at $159. The stock has dropped off some, but is still showing a significant increase at around $125.
Experts recognize the significance of the new technology, but caution that it may not justify quite so much excitement and Wall Street enthusiasm. "While we appreciate the extraordinary significance of optical switching technology," says Fayad Abbasi, analyst for StreetAdvisor.com, "we are left scratching our heads when the market adds $23 billion to Agilent's market cap, particularly as the total addressable market in 2003 is expected to be closer to $12 billion....When we look at the market opportunity, Monday's price action looks to be driven more by hype than reality. At best, aggressive revenue expectations are closer to $3.5 billion for Agilent as a result of the announcement."
The switching platform, which includes the first two commercial photonic switches created by Agilent, a 32 x 32 port photonic switch and a dual 16 x 32 port photonic switch, is based on Agilent technology that uses an innovative combination of inkjet and planar lightwave circuit technologies. Says John D. O'Rourke, general manager of optical networking division at Agilent, "We've taken the inkjet activator technology and discovered we can control a very unique optical switch utilizing that technology." O'Rourke says that Agilent is the only company with this type of switching technology. "It's fair to call it the first practical optical switching technology with no moving parts and which is based on elements that are already in mass production," he says.
Edward C. White Jr., analyst with Lehman Bros., notes that while there are a number of companies that are working on the switching systems themselves, Agilent is instead intending to provide a subsystem which could be sold to those switch manufacturers. "[Agilent is] probably the first to look at this from the vantage point of offering a subsystem or a major component that would go into an optical switch," he says.
According to the company, the Agilent Photonic Switching Platform is already in trials, and commerical prototypes will be available by the end of 2000.