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Optical/IP

Fiber Access Relieves Test Firms

Fiber deployments are all the rage in 2005, with the RBOCs digging up roads and municipalities seeing the need for video-enabled networks (see SBC Sheds Light on 'Lightspeed', Verizon Says, 'Hello, Moto', and Paris Presents Blurred TV Picture).

That, in turn, is having a positive impact on the fortunes of some test-and-measurement firms. One is Acterna Corp., which landed what it describes as a major FTTx test-gear contract with an unnamed RBOC -- surely either SBC Communications Inc. (NYSE: SBC) or Verizon Communications Inc. (NYSE: VZ) -- late last year (see Acterna Bags RBOC FTTX Test Deal).

And around the same time, Acterna delivered the same equipment, its MTS-5100e Optical Time Domain Reflectometer (OTDR) that can detect fiber breaks, to the U.S. Navy.

"There's been a definite upturn in demand for FTTx test products in the past 12 to 18 months, particularly in North America and Europe," says spokesman Nick Rowan, who says the vendor is engaged with other major carrier customers for FTTx-related deals.

Another test firm riding the fiber wave is Sunrise Telecom Inc. (Nasdaq: SRTI). It recently announced that it expects to exceed its guidance for its fourth-quarter revenues on the strength of its fiber-related systems (see Sunrise to Beat Q4 Guidance).

Sunrise expects to report fourth-quarter revenues of between $18 million and $20 million when it makes its full financial statement on February 9, compared with its previous estimates of $12 million to $16 million.

"Fiber optics sales are beginning to benefit from the positive impact of large-scale FTTx deployment plans by telecom operators," notes the firm.

That news sent Sunrise's share price soaring by more than 30 percent early last month to $3.45, though it has since tailed off to stand at $3.04 today.

EXFO Electro-Optical Engineering Inc. (Nasdaq: EXFO; Toronto: EXF) has also benefitted from the upswing. It recorded year-on-year sales growth of 35 percent in its first-quarter fiscal 2005 announced on January 12, with revenues of $21.6 million (see EXFO Increases Sales in Q1).

The company noted that it had "shipped several FTTx-related orders to a Tier-1 network service provider who accounted for 25 percent of total sales in the first quarter of 2005." (See EXFO Bags FTTP Test Deal.) It also said that a "second major US-based network service provider" had signed a four-year deal for the exclusive delivery of a "suite of FTTx products" after the first quarter had closed.

But the financial markets had expected even better results, and EXFO's share price dropped more than 6 percent on the news to $4.90 from its previous closing price of $5.24. Today its share price stands at $4.57.

— Ray Le Maistre, International News Editor, Light Reading

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