Have 'telecom bubble' wounds finally healed?

SAN DIEGO, CA--In anticipation of the upcoming Optical Fiber Communication Conference and Exposition and the National Fiber Optic Engineers Conference or OFC/NFOEC 2010 (www.ofcnfoec.org) to be held March 21–25 in San Diego, I thought it appropriate to find out if the financial wounds from one of the darker segments of telecom's history--the "Bubble" of 2000/2001--were finally healing.

SAN DIEGO, CA--In anticipation of the upcoming Optical Fiber Communication Conference and Exposition and the National Fiber Optic Engineers Conference or OFC/NFOEC 2010 (www.ofcnfoec.org) to be held March 21–25 in San Diego, I thought it appropriate to find out if the financial wounds from one of the darker segments of telecom's history--the "Bubble" of 2000/2001--were finally healing. That is, are companies hiring, are fiber-optic installations increasing, and is anyone in the communications industry making money? As a 'victim' of the telecom bubble who thankfully exited the business back in 2003 after one-too-many layoffs, I wanted to revisit the health of the telecom industry, nearly a decade after those dark days began.

Jobs

Unfortunately, a truly objective review of the telecom jobs picture is difficult considering the worldwide economic downturn of the past year. Many of my former colleagues lost their telecom jobs in this latest downturn, and are still looking for gainful employment. Fortunately, many of them see signs that jobs are coming back. According to a report posted March 9 by Tracy Ford at RCR Wireless News on www.telecomcareers.net, about 3800 fewer people were employed in February compared to January in the telecommunications sector. However, employees in the communications equipment sector were up 800 in February.

Fiber-optic installations

The title of his February 15 review of the optical equipment market from Stephen Hardy, chief editor of Lightwave (www.lightwaveonline.com), was "Infonetics: Positive Q4 can't rescue 2009 optical equipment market." Hardy says that Infonetics' (www.infonetics.com) quarterly Optical Network Hardware report notes that sales of 40 Gbps technology continued the slowdown first seen in Q3 2009. However, it predicted that this niche will rebound by the second half of 2010.

Another data point from ElectroniCast Consultants (www.electronicast.com), a market and technology forecast consultancy addressing the fiber-optics communications industry, says that global fiber optic connector and mechanical splice consumption--a good indication of optical communications industry growth--was nearly $1.66 billion in 2008. The report says that strongly rising quantity growth will be partially offset by declining average prices and that due to the multi-industry worldwide economic crisis, the forecast is relatively flat for 2009. By the year 2013, the worldwide consumption value is forecast to reach $2.5 billion. The Americas (South, Central and North America) led in global consumption with 58% or $962 million in 2008. Fortunately, American consumption will expand in value to nearly $1.4 billion by 2013, a healthy growth rate.

Yet another encouraging forecast on active optical cables (AOCs) from Information Gatekeepers Inc. (IGI; www.igigroup.com) predicts that the total length of optical fiber shipped inside AOCs is expected to range from 35 million meters in 2010 to 986 million meters by 2014--nearly a three-fold increase in four years! It also forecasts that AOC market revenue will grow from $137 million to over $2.45 billion during the same time period.

Telecom company financials

Forecasts and job prospects aside, the best way to gauge the health of the fiber-optic communications industry is by the actual bottom-line performance of major companies in varying communications sectors.

Telecom service provider Huawei (Shenzhen, China) was short on details, but said that contract sales reached $30.2 billion in 2009, a 30% increase from 2008. For its Q4 ended December 26, 2009, optical networking equipment company Infinera (Sunnyvale, CA) saw full-year revenues of $309.1 million compared to $353.4 million for 2008; however, Q4 2009 revenues were $90.2 million compared to $83.4 million in the previous quarter and higher than the $86.2 million for Q4 2008--perhaps an indication that 2010 will be a better year than 2009.

The Corning (Corning, NY) press release for Q4 and 2009 total sales said, "Telecommunications segment sales were $405 million, down 10% sequentially and similar to the fourth quarter of 2008. An expected slowdown in fiber-to-the-home sales and normal seasonal declines in North America contributed to the lower quarterly sales. This was partially offset by continued strong demand for private network products in North America and optical fiber sales in China." And unfortunately, the press release continues, "The company anticipates its first-quarter [2010] Telecommunications business segment sequential sales to be down 10% to 15% due to lower private network and fiber demand in China."

Communications component provider JDSU (Milpitas, CA) saw its Communications Test and Measurement revenue of $176.9 million (for calendar Q4 2009) increase 23% from the previous quarter. Revenue from this segment represents 51% of JDSU's overall revenue. It also saw its Communications and Commercial Optical Products revenue of $112.3 million increase 11% compared to the previous quarter. Revenue from this segment represents 33% of total JDSU revenue. Again, an upward trend is apparent. Let's hope that 2010 is the start of a long-term growth period for the communications industry and that the term 'jobless recovery' fades into a distant memory.

--Gail Overton

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