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2001 Top Ten: Share Price Collapses

Light Reading
News Analysis
Light Reading
12/24/2001

In 2000, the companies on the Light Reading Index hit the jackpot. One year later, they fell in the crapper.

Most of the companies on this list landed here because they had troubles that went beyond the general spanking everyone took at the hands of the economic recession.

The Light Reading Index itself lost about 71 percent of its value between Dec. 22, 2000, and Dec. 21, 2001, but these ten stinkers lost even more value than that. Even when you look at the companies whose shares performed the best in 2001, it's obvious that some of the winners were losers – and even losers get lucky (sometimes).

These companies burned shareholders – and Light Reading's stock pickers. Embarassingly enough, Light Reading made Corning – No. 9 on the lackluster list – our number one pick in our Top Ten Optical Stocks for 2001, published in August. We also picked ONI, which crops up at No. 8 on this list. Apologies and mea culpas all round.

Of course, a share price collapse doesn't necessarily mean that a company's prospects will remain dismal in perpetuity. It just means there were more sellers than buyers for that particular stock in that particular year.

But while share price comparisons may be a fleeting and esoteric measurement, they do tell us when investors, for whatever reason, decide that a company now has less potential than was once believed. Indeed, stocks are bought for all kinds of reasons, but they're only held in expectation of payoff (or laziness).

That said, hold your nose. Here's the list:

No. 10: Applied Micro Circuits Corp. (Nasdaq: AMCC)

AMCC began the year with a record-breaking quarterly report, then subsequently followed its peers into the doldrums with reduced earnings and a series of executive changes (see AMCC Reports Record Q3 Revenues, Chilling Optical Chip Dip , AMCC Picks a President, and AMCC Names Controller).

Like its brethren, AMCC was whipped by inventory problems resulting from the carrier spending slowdown. It also had to contend with increased competition from Intel Corp. (Nasdaq: INTC) and a variety of chip startups (see Intel Swaggers Into OC192 Market and Why Cisco Likes Quake).

The good news is that the company has kept its R&D spending at a respectable level, even while it was laying folks off. It also attracted former JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU) honcho Kevin Kalkhoven to its board, a guy that's had the Midas Touch in the optical components space (see Report Predicts Chip Rebound, Kalkhoven Joins AMCC Board, and AMCC Makes Light of Layoffs).

No. 9: Corning Inc. (NYSE: GLW)

In 12 months, Corning went from expanding its optical fiber manufacturing capacity to laying off 12,000 workers, closing several plants, and "idling" the manufacture of fiber (see Corning's Still Building Big, Corning Slows Expansion, ONI Meets Estimates, Boosts Guidance, Corning Cuts Again, and Corning Slams on the Brakes).

Corning president and CEO John Loose is still convinced there's money to be made in building out China's optical infrastructure, but shareholders need more convincing that Loose has a plan to get Corning out of trouble (see Corning CEO Likes Lasers, China and Corning Touts China, Rips Analyst).

No. 8: ONI Systems Inc. (Nasdaq: ONIS)

At the beginning of the year, we grew accustomed to ONI knocking the cover off the ball and raising – not lowering – its financial expectations. Some people were even beginning to think that the metro market was somehow immune to the larger economic downturn (see ONI Beats Estimates, Boosts Guidance, ONI Systems Buys Finisar Folly, ONI's Secret Weapon, and ONI Beats Numbers, Boosts Guidance).

That optimism, of course, was about as short lived as a case of beer on a troop train. ONI, like everyone else, eventually got taken to the shed (see ONI Shares Fall Sharply After Warning, ONI Slims Down , and ONI Stock Takes a Hit).

Table 1: 2001 Top Ten: Share Price Collapses

COMPANY PRICE ON 12/22/2000 PRICE ON 12/21/2001 % OF CHANGE
Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC) 65.69 10.01 (84.76)
Corning Inc. (NYSE: GLW) 56.25 8.54 (84.81)
ONI Systems Inc. (Nasdaq: ONIS) 36.06 5.41 (84.99)
Sycamore Networks Inc. (Nasdaq: SCMR) 35.00 4.89 (86.02)
Corvis Corp. (Nasdaq: CORV) 21.62 2.84 (86.86)
New Focus Inc. (Nasdaq: NUFO) 28.93 3.79 (86.90)
Avanex Corp. (Nasdaq: AVNX) 53.25 5.83 (89.05)
Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) 24.93 2.23 (91.06)
Redback Networks Inc. (Nasdaq: RBAK) 49.75 3.87 (92.22)
Marconi PLC (Nasdaq/London: MONI) 21.50 1.16 (94.56)
Source: Stockpoint





No. 7: Sycamore Networks Inc. (Nasdaq: SCMR)

Sycamore is the textbook case of an equipment provider that was built to cater to greenfield CLECs. The problem: they had to change plans rather quickly when their target market woke up shoveling coal in the furnaces of hell (see Sycamore Drops a Bomb, Sycamore: Good News in the Offing?, Sycamore Waterlogged, and Sycamore Enters Crisis Mode).

No. 6: Corvis Corp. (Nasdaq: CORV)

The long-haul market is down and out for a while, and shareholders that thought too much of Corvis early on are having a little crow with their Christmas dinner (see No Riches From Optical Switches , Corvis Cuts Back, Corvis Goes Electric, Corvis Execs Get Bullish, and Corvis Feels Qwest Fallout).

No. 5: New Focus Inc. (Nasdaq: NUFO)

Being a cutting-edge component play was tough in 2001 because it meant that, like New Focus and others, you pretty much got hammered all year long. New Focus was hit especially hard by cutbacks as it let go some 43 percent of its staff (see New Focus, New Laser, New Focus Slows Down, New Focus Sees New Losses, and New Focus Gets New CEO).

No. 4: Avanex Corp. (Nasdaq: AVNX)

Avanex is yet another components company in the throes of a turnaround. It didn't get hammered as badly as some systems vendors, but CEO Paul Engle has definitely got his work cut out for him next year (see Avanex Slips on Cautious Outlook, What's Next for Avanex?, and Avanex Misses by Two Cents).

Table 2: 2001 Top Ten: Share Price Performers
COMPANY PRICE ON 12/22/2000 PRICE ON 12/21/2001 % OF CHANGE
Harmonic Inc. (Nasdaq: HLIT) 5.96 12.01 101.21
Riverstone Networks Inc. (Nasdaq: RSTN) 13.06* 17.09 30.83
Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI) 17.50 17.10 (2.28)
Siemens AG (NYSE: SI; Frankfurt: SIE) 80.34 65.25 (18.78)
Veeco Instruments Inc. (Nasdaq: VECO) 38.62 30.68 (20.56)
Xilinx Inc. (Nasdaq: XLNX) 48.37 37.68 (22.10)
Molex Inc. (Nasdaq: MOLX) 40.00 30.06 (24.85)
Foundry Networks Inc. (Nasdaq: FDRY) 14.37 7.99 (44.42)
Agilent Technologies Inc. (NYSE: A) 54.69 27.95 (48.89)
EXFO Electro-Optical Engineering Inc. (Nasdaq: EXFO; Toronto: EXF) 23.37 11.25 (51.87)
* Because of its February IPO, data for Riverstone Networks was only measured from 2/16/2001 to 12/21/2001

Source: Stockpoint





No. 3: Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7)

Avici taught us a lot this year. First, it taught us that winning in the core router market isn't as easy as Juniper Networks Inc. (Nasdaq: JNPR) makes it look. Second, it taught us that when your top sales guy leaves the company, it's not a material event. In 2002, the company just might learn that if the fish ain't biting, it's time to change bait (see Sales Chief Sneaks Out of Avici, Juniper Wins Monster Router Test, Crunch Time at Avici? , Avici Shuffles Top Execs, and Avici Intros Tiny TSR). Incidentally, Avici's marketing department has spent a good deal of its time this year complaining that Light Reading's coverage is too negative. Check out the one-year stock chart for this puppy and tell us what we should have written instead.

No. 2: Redback Networks Inc. (Nasdaq: RBAK)

In 2000, Redback really lived it up. Now they may never live that down. In one of the year's most comical examples of a systems company meltdown, Redback managed to miss a merger with Juniper, keep a revolving door in its executive offices, and generally manage to explode like a frog on a hot plate. Meanwhile, all we want to know is, did Larry Blair EVER come back from his leave of absence? We doubt it (see Why Redback Got Whacked, Kruep Leaves Redback for Procket, Redback and Juniper Talked, Balked, Redback's Blair off to the Races, Redback's Woes Mount, DeNuccio Joins Redback, Redback's New Sales Strategy, and Listwin Joins Redback Board).

No. 1: Marconi PLC (Nasdaq/London: MONI)

The words "Marconi" and "market dominance" go together like mustard and pancakes. Lord (Homer) Simpson left a legacy of greed and mediocrity and, thanks mostly to His Inexcellency, Marconi shareholders will continue to pay for its managers' stupidity for years to come (see Marconi Stock Tanks, Heads Roll at Marconi, Fraud Case Hangs Over Fore Fat Cats, Marconi Loss Tops £5B, Marconi Pays Off Lord Simpson, and Are Fat Cats Slimming Down?).

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
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Peter Heywood
Peter Heywood
12/4/2012 | 7:23:21 PM
re: 2001 Top Ten: Share Price Collapses
Great minds...one of the Top 10s we have in mind is on "Forecasting Follies". We could do with some help to make sure we really nail the worst ones. This could be bad calls by financial analysts or goofy forecasts from market researchers.

Pls send your suggestions to [email protected]
optiboy
optiboy
12/4/2012 | 7:23:21 PM
re: 2001 Top Ten: Share Price Collapses
Why did you delete my post?
optigirl
optigirl
12/4/2012 | 7:23:21 PM
re: 2001 Top Ten: Share Price Collapses
You folks have anything on tap for bad Optical Analyst predictions this year? Like who was recommending some of these doggies in the early part of the year? Or, how about a list of the Top Ten industry bozos? Predicting the future is tough but how bad do you have to be before you can no longer blame the economy?

BTW....Happy Holidays to everyone. May we all prosper better in the New Year.

Peace.
optigirl
optigirl
12/4/2012 | 7:23:20 PM
re: 2001 Top Ten: Share Price Collapses
A few suggestions:

Anyone who pushed the following stocks:

Corvis
Sickamore
JDS
Nortel
Lucent
Corning


If you want to pick on market researchers, it all starts and ends with RHK. How many times have they lowered their numbers?

However...

We should also take note of those you do a good job and tell it like it is....

One analyst that I would like to compliment is Dave Jackson at Morgan Stanley. Telling everyone to dump Ciena at $65 was a great call. Seeing as how I didn't listen at the time to some good logic, I will be big enough to say, Dave, you were right.
Peter Heywood
Peter Heywood
12/4/2012 | 7:23:20 PM
re: 2001 Top Ten: Share Price Collapses
I'll spell that [email protected]
DCITDave
DCITDave
12/4/2012 | 7:23:14 PM
re: 2001 Top Ten: Share Price Collapses
Juniper ranked 11 or 12, so they didn't qualify to be among the top ten.

ph
reoptic
reoptic
12/4/2012 | 7:23:14 PM
re: 2001 Top Ten: Share Price Collapses
Juniper was down 84% over this same period yet they are notably absent from this list. Another one of LR recommended stocks...please publish another list of recommendations so we can sell.
yomamma
yomamma
12/4/2012 | 7:23:11 PM
re: 2001 Top Ten: Share Price Collapses

Then maybe they have enough money left to buy a start-up or two? At least that's what I've heard...
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