I'd assume both companies have been conservative about expanding manufacturing, given how much the telecom downturn bashed them. Do they dare beef up capacity now? Bookham says yes. Should JDSU?
In an analyst note this morning, Sam Dubinsky of Oppenheimer & Co. Inc. wonders if JDSU should worry about double-ordering. That's what happens to chip companies when capacity runs short: Customers that need 10 of something order 15 or 20 of it, figuring they'll only get 10 anyway. (I'm using low numbers for purposes of lazy typing.) It artificially boosts a company's forecasts... and then the floor falls out from under them when it turns out that demand wasn't as high as they'd been told.
JDSU doesn't think this is happening yet. But it's something extra to worry about, anyway.
Meanwhile, this just in: Avanex Corp. (Nasdaq: AVNX), on its earnings call right now, is noting that it's going to continue expanding capacity.
— Craig Matsumoto, West Coast Editor, Light Reading