News Article

Optical Telecom Component Sales Up 11% In 2005

JDSU maintains pole position as fiber-optic component manufacturers move towards greater financial health.

Sales of optical components used in fiber-optic telecommunications grew 11% in 2005 to reach $2.92 billion, according to new figures from Ovum-RHK.

The market research company said that while sales in the fourth quarter of 2005 were slightly weaker than the equivalent period in 2004, the annual trend remained positive, driven by network build-out to support IP and video services.

"JDSU continues at the top of the heap, with Finisar and Sumitomo in second and third, respectively," claimed Ovum-RHK. "Rounding out the top five are Avago and Bookham."

The market recovery has had a positive impact on the financial health of the remaining companies in the ravaged sector. Average gross margins at nine publicly-traded optical component suppliers were 29% in the final quarter of 2005, representing a big improvement from the third quarter.

In particular, Finisar has been profitable in its last two fiscal quarters. And while Bookham is yet to break even, it has bolstered its cash position recently through the sale and leaseback of its InP fab, and another public offering of stock.

"Optical component suppliers are happily supplying arms to all equipment vendors engaged in the network build-out," said Daryl Inniss, VP of optical components at the market research company.

"Growth is coming from all segments, including carrier metro, long-haul and access networks, and enterprise," continued Inniss. "Component vendors best equipped to meet the demand stand to grow and increase market share."

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