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June 18, 2000
Today doctors are touting the benefits to a high "fiber" diet. Surprisingly, this may also be good advice to investors…"fiber" optics that is.
The phenomenal growth of the Internet is fueling the "Need for Speed" - more bandwidth. Internet traffic is doubling every 100 days and the number of Internet users worldwide is projected to reach over 475 people by the year 2002. It's no wonder many companies are scrambling to develop faster more efficient ways to transmit voice, data and video over the Internet. Today some of the old traditional copper phone lines are being replaced by a revolutionary new technology that uses light to transmit information - fiber-optic networks. These fiber-optic networks are being laid by companies such as Qwest Communications (symbol Q) and Global Crossing Ltd. (symbol GBLX). Although both Qwest and Global Crossing have experienced tremendous increases to the share prices, the hottest companies in the fiber optics industry are the component manufacturers who are responsible for developing the building blocks for the optical systems. These companies collectively have returned over 1000% in 1999 -- a nice boost to your portfolio. The kingpin of them all is JDS Uniphase (symbol JDSU). Early investors in JDS Uniphase were handsomely rewarded with a 3900% return in 1999.
JDS Uniphase is the dominant provider of advanced fiber-optic components and modules for the optical networks. The Company's products include semiconductor lasers, high-speed external modulators, transmitters, amplifiers, couplers, multiplexers, circulators, tunable filters, optical switches and isolators for fiber-optic applications.
Due to the high demand for fiber-optic components, JDS Uniphase is projecting a year-over-year growth of 80%. Although the company sports a high valuation, the combination of its outstanding management, its foothold in a hot industry and its ability to effectively execute acquisitions will keep investors coming back for more. However, JDS Uniphase is not for the faint of heart. Its rich valuation and high revenue expectations can create tremendous volatility in the stock price. There are many skeptics that fear the company cannot maintain its torrid growth rate and any disappointment can send the stock tumbling down. But for those investors willing to accept some volatility and believe the potential for high growth outweighs the risk – do what the doctor ordered – increase your fiber with JDS Uniphase!
Note: If you are interested in learning about the fiber optics industry and have a willingness to suffer through some tekkie-speak, try this web site www.lightreading.com.
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