The LR Index of telecom equipment stocks is hot on the comeback trail, having climbed 86 percent in 2003.

The Light Reading Index was launched in January 2000 with a starting price of 1,000, climbing to an all-time high of 1,368 in August 2000. By September 2002, it had hit an all-time low of 66.

The Index outperformed the Nasdaq Composite Index, which rose 50 percent in 2003, and it included many of the Nasdaq's top gainers. What helped these stocks? For one, telecom was among the most battered sectors on Wall Street, poised for a rebound. Many of the companies in the LR Index were trading at or near the value of the cash they had on their balance sheets. When the market turned and technology started coming back, investors revisited the most battered of all tech sectors.

The cheapest of the bunch in the Index -- particularly low-priced chip and optical components stocks -- had the biggest percentage gains in 2003. Avanex led the bunch with a 370 percent gain in 2003. Next were Foundry Networks Inc. (Nasdaq: FDRY), with a 235% climb, and Optical Communication Products Inc. (OCPI) (Nasdaq: OCPI), with 234%.

Here’s a list of the top gainers in the LR Index in 2003, in percentage terms:

1. Avanex Corp. (Nasdaq: AVNX) 370%
2. Foundry Networks Inc. (Nasdaq: FDRY) 235%
3. Optical Communication Products Inc. (OCPI) (Nasdaq: OCPI) 234%
4. MRV Communications Inc. (Nasdaq: MRVC) 213%
5. PMC-Sierra Inc. (Nasdaq: PMCS) 218%
6. Corning Inc. (NYSE: GLW) 177%
7. Harmonic Inc. (Nasdaq: HLIT) 176%
8. Finisar Corp. (Nasdaq: FNSR) 174%
9. Alcatel SA (NYSE: ALA; Paris: CGEP:PA) 164%
10. Corvis Corp. (Nasdaq: CORV) 127%
11. Juniper Networks Inc. (Nasdaq: JNPR) 122%

Of course, the gains and losses in smaller stocks can be exaggerated in percentage terms. Among stocks with prices over $10, here were the big gainers:

1. Foundry 235%
2. PMCS 218%
3. Corning 177%
4. Alcatel 164%
5. Veeco Instruments Inc. (Nasdaq: VECO) 128%
6. Juniper 122%
7. Siemens AG (NYSE: SI; Frankfurt: SIE) 83%
8. Cisco Systems Inc. (Nasdaq: CSCO)70%
9. Agilent Technologies Inc. (NYSE: A) 52%

Equipment giants Nortel Networks Corp. (NYSE/Toronto: NT) and Lucent Technologies Inc. (NYSE: LU) also had good years, with share price gains of 114 percent and 88 percent, respectively.

What about the laggards? Only three stocks actually went down: Redback Networks Inc. (Nasdaq: RBAK), Riverstone Networks Inc., and Digital Lightwave Inc. (Nasdaq: DIGL). Riverstone and Redback were both booted from the Index. Riverstone has been delisted from Nasdaq and currently trades in the pink sheets. Redback has been reorganized. Digital Lightwave, trading at $0.95 after falling 36 percent in 2003, may not be on the LR Index much longer.

A new addition to the LR Index in 2003 was Network Equipment Technologies Inc. (net.com) (NYSE: NWK), which replaced Redback.

In the new year, the LR Index is off to a good start -- up 7 percent in 2004.

— R. Scott Raynovich, US Editor, Light Reading