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I was surfing the E-Tek Dynamics website today. Just thought I would record some notes as I surfed.

1) ETEK's Asian Market prescence:
Some Asian customers include Fujitsu, and Rikei:

ETEK has a solid market prescence and market share in Asia, something which JDSU does not have.

This is good news, because Asian companies haven't even started on using b2b e-commerce. Heck, they're just starting out using internet e-tailing. As markets in Japan, Korea, Hong Kong, and Taiwan increase their Internet traffic, the demand for more bandwidth will inevitably grow, just like it is here.
That said, however, I am not sure where things stand between JDSU and Furukawa (one of JDSU's biggest shareholders). Furukawa makes the same kind of Er (erbium) doped fibers, optical amplifiers, couplers, and DWDM's that ETEK/JDSU does. Now that JDSU/ETEK has a solid market prescence and market share in Japan, it will be very interesting to see how Furukawa responds.

2) Earnings will be diluted by the addition of ETEK. JDSU's shares outstanding will increase by 67.4 million shares. Since it will have over 572 Million shares outstanding after the 2-for-1 split in March/2000, the 67.4 million shares will bring the new total to over 639.4 Million shares outstanding. Earnings were going to be diluted anyways because of the split.
639.4 Million shares? That's almost as much shares outstanding as QCOM. Hmmm.... If JDSU/ETEK goes through 3 more stock splits, then JDSU/ETEK will have more shares outstanding than CSCO, plus a market cap rivalling MSFT.
Which puts JDSU/ETEK as the next player in the race for a trillion dollar valuation. Unbelievable.
Which also means there isn't much room for error. Anything less than flawless execution of the business (like MSFT, CSCO, and INTC) will mean bad news for the stock price.
Makes me wonder when the party will be over.

3) Emerging players in the CATV market, as determined by ETEK:
(Definition: HFC == Hybrid Fibre Coax Network)

SCMR - develops and markets optical networking products. Think of CSCO hubs, switches, routers, but for fibre optics. Potential customer.
HLIT - designs, manufactures and markets digital and fiber optic systems for delivering video, audio and data services over cable, satellite, HFC, and wireless networks. Potential competitor.
SFA - provides digital video, voice and data communications products to cable operators, broadcasters, and telcos. Potential competitor.
GIC - supplier of products for for wired and wireless cable television networks, as well as hybrid fiber/coaxial network transmission systems used by cable television operators. Potential competitor.
ANTC - complete provider of head end products for CATV systems. Customers include Time-Warner, Cox communications, ComCast Corp., and MediaOne. Potential customer.

For Cerent and Monterey, see 3a) below.

I can't help but get the impression that CATV is going to be an exploding industry.

3) a) CSCO:
CSCO has set the standard (which JDSU has been following, by the way) for adding to their earnings growth by acquiring companies.
Of special note are the following companies that CSCO purchased in 1999:
Pirelli Optical Systems
Cerent Corp.
Monterey Networks.

All are involved in building optical transport networks. JDSU/ETEK makes the components which go into these next generation optical networks.
Potential customer? We'll have to wait and see with baited breath......

4) Manufacturing capacity:
ETEK's manufacturing plants in Canada, Taiwan and China will be a substantial value-add for JDSU.
FibX is a fibre optic manufacturing plant that ETEK purchased from a Taiwanese hi-tech company.
My guess right now is that because JDSU has such a dire need for manufacturing capacity right now, they will become ETEK's exclusive customer for now, and will work out integration of the two corporate cultures down the road.
With all the added manufacturing capacity, I really can't understand why JDSU still believes they need to double their manufacturing capacity for at least the next 2 years.

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