Optical/IP Networks

Corning Hits Its Stride

Corning’s decision to extend its portfolio of optical products continued to pay off big today as its share price punched through the $200 mark for the first time. It closed at $203, up 8 points for the day.

Analysts say its stock is surging on the back of its $5 billion spending spree on four companies –- all of which are designed to add active components (which drive data signals) to its existing portfolio of passive fiber wares (which carry them).

Here’s a list of what Corning http://www.corning.com has bought this year, when, and for how much:

· BT’s Photonics Technology Research Center (PTRC), on February 14, 2000, for approximately $66 million.

· NetOptix Corp, a DWDM component manufacturer, on February 14 for approximately $2 billion in stock.

· Siemens AG’s worldwide optical fiber and cable businesses, which include Siecor Corp, on February 2, for around $1.15 in stock.

· Oak Industries Inc, including its subsidiary Lasertron, which makes 980 nm pumps, on January 28, for $1.8 billion in stock.

Evidence of Corning's newfound interest in all things active will be on display at the Optical Fiber Communications (OFC) Conference 2000 show being held in Baltimore, Maryland, next week. The company plans to exhibit amplifiers, multiplexers, optical switches and filters.

Still, some observers question whether Corning really merits its all time high stock price. “With high-tech blue chips like Corning, announcements in hot areas like optical networking get a more positive reaction than might be merited on the fundamentals because the large mutual funds view these stocks as their only prudent way of playing the hot areas. They can't chase the small caps so they jump on the big caps,” says a senior economist at a major telecom systems integrator, who spoke anonymously.

Corning’s rocketing share price gives it the buying power to make yet more acquisitions, something the company isn’t ruling out. “I wouldn’t say we’re trying to match Cisco [in terms of acquisitions], but we’re always looking for opportunities,” Paul Rogoski, spokesperson for Corning’s fiber and photonics operations.

The company's aggressive move into active components puts it in the same space as mondo optical component manufacturers like JDS Uniphase Corp http://www.jdsu.com. But Corning says it doesn’t see them as direct competitors. “We’ll compete with JDSU, but we’re also a customer of theirs, and a supplier. The optical industry is funny like that,” says Rogoski.

—Stephen Saunders, US editor, Light Reading, http://www.lightreading.com