Will ALA step up to the plate and provide the same support for AVNX? I so hope so.
Still long some AVNX.
I think this news is a positive indicator for fiber stocks in general. NT sees the fiber biz coming and does not want to lose a valuable component supplier. NT also selfishly doesn't want consoldation, because if BKHM goes away, they'll have to pay substantially more for others to pick up the slack.
Hey Scotch, does this BKHM news give you any optimism in AVNX? Certainly AVNX and BKHM are in the same boat; Also, ALA is in the same boat as NT and does not want to lose its primary component supplier in 2006 (right as the optical boom gets really started), lest they have to pay more to JDSU and others.
I don't own any of the pure component providers. So, you're probably asking the wrong person. I've looked at both BKHM and AVNX and felt there were better places to put my money. Having said that, I do think that the BKHM news is encouraging for the sector, in general. IF there is fear that there's a possible component shortage a couple/few years down the road (and I'm not sure that's the reason NT made its decision), that would lead one to believe the telecom equipment companies are at least hedging their bets that there will be a big buildout.
On another company in the group, did anyone see the projections for a shortage this year in LCD glass? Corning could be an interesting play, since it could have the LCD glass market to bridge the gap between now and when they see a significant pickup in their telecom biz. I don't currently own it and would be interested in other views after doing your dd.
I enjoy giving unsolicited advice. The component supplier sector needs consolidation in the worst way IMO. It can't support 3+ monsters companies and many smaller competitors. I view the BKHM news as bad for AVNX. If BKHM goes out of business AVNX would be the recipient of more business at higher prices. This news was just a band-aid, it will prolong the suffering. Even if ALA does the same thing for AVNX I expect it will just delay the inevitable - CONSOLIDATION.