Optical Electronics Industry: Lighting Up the Information Superhighway

After three years of indigestion, nothing spells relief like a dose of economic growth. As the general economy goes, so goes the telecommunications industry, which went through a three-year economic downturn. Although the downturn was painful for industry and investors, it was an inevitable event

Based on the latest data, it appears that the telecommunications industry, which includes the optical electronics industry, is slowly bouncing off the bottom. The Metro/Access market remains the biggest opportunity for network equipment manufacturers, but it also remains the bottleneck to achieving ubiquitous broadband services.

A variety of sources will continue to put pressure on this bottleneck:

* Wireless services continue to grow from voice to data services, with mobility services to follow within 3 to 5 years. Growth in wireless services puts demand on network resources to connect wireless networks to each other and the Internet.

* Broadband to the home and small business has reached 20-30 percent penetration and is expected to continue its double-digit subscriber growth.

* Video on demand is expected to grow to double digits as cable companies seek to expand their services and lock on the home market. VOD services will require DWDM metro rings to connect and manage cable companies' distribution head ends and hubs to the home.

Similar pressures are also building in the international settings. Europe is primarily facing demand to support its deployment of 3G wireless services.

Primer on the telecom and optical electronics industry

Roth Capital recently issued a comprehensive, 122-page report entitled "Lighting Up the Information Superhighway: Optical Electronics Industry," in which it provided a primer on the telecom and optical electronics industry, discussed methodologies for assessing and valuing companies in the industry, and offered investment recommendations.