Optical components

Capacity Constrained

4:55 PM -- Maybe I'm obsessing over the wrong angle, but I still find it interesting that JDSU (Nasdaq: JDSU; Toronto: JDU) and Bookham Inc. (Nasdaq: BKHM; London: BHM) both ran into capacity constraints -- both in tunable lasers, and JDSU on ROADMs as well. (See Doink! JDSU Hits Capacity Ceiling.)

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

Pete Baldwin 12/5/2012 | 3:33:58 PM
re: Capacity Constrained Regarding the possible addition of capacity, JDSU's not specifically commenting. I'll have to re-dig though the conference call to see what hints there might have been.

Avanex, btw, is an interesting case: They went pretty much all-in with contract manufacturers, as I understand it, which means they can theoretically dial up capacity (or dial it down) at will. It still costs money, but there's less risk involved.
Steve0616 12/5/2012 | 3:33:56 PM
re: Capacity Constrained For some reason, they can not promise delivery on a timely basis and thus are getting killed.
And, what is up with their ROADM biz.....while everyone is saying they are capacity constrained AVNX, which announced availability in spring, is not putting up any numbers on these, either.
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