Thanks John for the excellent = report.

-----Original Message-----
From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of John Maycock
Sent: Wednesday, November = 21, 2001 10:32 PM
To: = canslim@lists.xmission.com
Subject: RE: [CANSLIM] = OT- Fiber capacity (Used to be Steel)

If I could add what I hope is some insight to = this discussion. This has nothing to do with CANSLIM except as background information.

There are two major issues facing the = transport side of the telecomm industry, dark fiber and network capacity. Dark fiber is = fiber that has been laid in the ground but is not yet carrying traffic. = Network capacity is the transmission capacity available on “lit” = fibers. As a fiber manufacturer Corning (GLW) is at the very end of the food chain, (70% of revenues IIRC). They had a really good run when everyone was installing = new fiber cables. When new fiber cables are ordered, the incremental cost of installing additional strands of fiber is relatively low, a few cents = per meter per fiber, compared to cable installation costs that can range from $2 = to $10 and over per meter. Therefore to avoid having to install another cable, = most service providers installed cables with many more fibers than needed, = hence future proofing themselves against what they perceived as future demand = and threats from the newly financed CLECs. That demand has not yet = materialized and the competition has fizzled. As the fiber in the cables have near = infinite capacity and at least a 40 year lifetime, I predict Corning will be in a = sorry state for some time to come despite their attempts to diversify. =

Corning is a special case among the fiber = optic companies. The situation is a little different for the equipment = manufacturers. They will profit from growth in network capacity. Contrary to what you = might think, demand for network capacity is still growing. The internet is = still growing at 100% per year, though voice and transaction data are back to = their regular 7%. The current big drivers for capacity are music downloads and = potentially video downloads. By mid 2002 some routes in the US will require = upgrades. However, the ILEC’s are in the catbird seat and are driving prices = down as the equipment manufacturers fight for business. The big names in the optical transport equipment business are IMHO the ones most likely to survive, = (Nortel, Lucent, Ciena, Alcatel and Fujitsu). There are others who have good = market shares in non-North American markets who will also be around. The mantra = of the industry is cost reduction.

To make the battle for survival more = interesting, there are predictions that Capex from the big 11 US carriers will drop a further 30+% YoY in 2002. Not only have we not yet seen the predicted consolidation among the equipment manufacturers, further consolidation = is likely among the service providers. Only a few will = survive.

Despite all this gloom, there are some = interesting stocks in the telecomm space. Network management software company TTIL = was mentioned here recently. They allow service providers to reduce their = operating costs. I do not mean to tout it, but it does stand out as having a = decent earnings record in the face of a declining market. Please IBD, = don’t write it up!

John

-----Original Message-----
From: = owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm
Sent: Wednesday, November = 21, 2001 9:54 AM
To: = canslim@lists.xmission.com
Subject: Re: [CANSLIM] = Steel<= /p>

<= /p>

Thanks Bill, I'll look forward to taking a look.<= /p>

<= /p>

Lots of dark fiber out there and too much legislation hampering the last mile. A = good combo of legislation that makes the last mile installation more cost = effective for the providers, some good technological applications and further = capacity take-out/industry consolidation should put the dark fiber to good = use. GLW is a start...glad to see their change in strategy lately. D'you also see = that they're refocusing their attention into other product lines as well? = Very nice.<= /p>

<= /p>

Again, thanks for the link,

<= /p>

Katherine= <= /p>

----- Original Message -----

From: Bill Triffet

<= /p>

To: canslim@lists.xmission.com

Sent: Wednesday, = November 21, 2001 11:51 AM

Subject: Re: [CANSLIM] Steel

<= /p>

Katherine,<= /p>

<= /p>

I receive this newsletter via email but is online as well called the Wave = Report. This issue has a blurb about the telecom and fiber optics industry. Its = http= ://www.wave-report.com/other-html-files/Currentwave.htm Talks about the meltdown of the telecom service providers and the = bandwidth glut. Says Corning is closing a fiber plant for 3 = months.<= /p>

<= /p>

-Bill<= /p>

<= /p>

----- Original Message -----

From: Katherine Malm

<= /p>

To: CANSLIM List Posting

Sent: Wednesday, = November 21, 2001 9:24 AM

Subject: [CANSLIM] Steel

<= /p>

I've been watching the steel industry with great interest this last year for = signs of economic recovery. Today, NUE, X, AKS are gapping up and breaking = their downtrends. Granted, this is on news of consolidation in the industry, = but it's exactly what you'd want to see to show signs of a bottom. Taking out = excess capacity in any industry is a sign of a change in tone. Now, if we can = just see more signs that "taking out excess capacity = in telecom and fiber optics is occurring, I'd be *very* = happy.<= /p>

<= /p>

Katherine= <= /p>