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Oclaro, Inc. Message Board

  • jackwellsail jackwellsail Mar 21, 2013 8:57 AM Flag

    MKM Partners Take on OFC/NFOEC Conferenc

    MKM Partners
    Optical Systems vendors sound better than Optical Components vendors at OFC.
    After two days at the OFC/NFOEC (Optical Fiber Communication Conference and Exposition/ National Fiber Optic Engineers Conference) trade show, we conclude that the Optical Systems vendors have considerably better near-term visibility than the Optical Components vendors. We think this is partially due to differences in the two industry structures, including levels of differentiation versus commoditization, and partially due to timing. Tier 1 North American carriers have only recently released calendar 2013 budgets. Given relatively short lead times, the Optical Components vendors likely will see better second-quarter orders than they are now seeing and talking about.
    Our company meetings and due diligence at the conference highlight that the leading coherent 100G Systems companies are differentiating themselves from the pack through superior technology. Ciena (ticker: CIEN) (rated at Buy, $22 price target) is solidifying its leading reputation in Metro Packet Optical solution and is also known for top-quality Core Transport and Switching gear. Infinera (INFN) (rated at Buy, $10 price target) is highly regarded for its differentiated Core Transport platform. On Monday, we met with Ciena's Director of Market Intelligence, and today we will see Infinera senior management. Our due diligence at the show suggests that Ciena has among the best near-term visibility in the industry, as Tier 1 North American budgets have firmed. We are also hearing about a generally positive 2013 tone for spending in other verticals, including push-to-talk (PTT), wholesale carriers and cable multiple system operators (MSOs), and think Infinera's first-half 2013 order pipeline is likely relatively healthy.
    We met with Finisar (FNSR) (rated at Buy, $19 price target), Oclaro (OCLR) (not rated) and Emcore (EMKR) (not rated), and will see JDS Uniphase (JDSU) (rated at Buy, $18 price target) Wednesday. The C

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