From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1841 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Thursday, November 22 2001 Volume 02 : Number 1841 In this issue: [CANSLIM] EPIQ Systems, Inc. RE: [CANSLIM] OT- Fiber capacity (Used to be Steel) ---------------------------------------------------------------------- Date: Thu, 22 Nov 2001 20:47:20 EST From: Mhboatman@aol.com Subject: [CANSLIM] EPIQ Systems, Inc. Tom, Do you have any idea what happened to EPIQ on Wednesday? At about 10:45 AM it dropped over 9% within a 5 minute span of time. Can't seem to find an explanation for the sudden retracement. I got stopped out which was a bid of a surprise? Howard - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Thu, 22 Nov 2001 19:47:33 -0800 From: "John Maycock" Subject: RE: [CANSLIM] OT- Fiber capacity (Used to be Steel) This is a multi-part message in MIME format. - ------=_NextPart_000_001C_01C1738E.877003E0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: 8bit Thanks to all for your comments. Tom has correctly pointed out that fiber is the medium of choice for transmission both in submarine and in greenfield sites. This will have some impact on Corning’s sales, but it is not an area I have studied. I can comment on the projected 3-5 yr annual growth rates for equipment sales on various continents, which will be reflective of where capacity expansion is occurring. North America is expected to be about 12%, Europe 7%, Asia 25%. Asia is obviously the place to be. (Note that these are market study numbers and contain assumptions that may prove to be wrong.) There are also some emerging Asian transmission equipment manufacturers but they are not traded in North America. You can bet the NA companies are already there as well. It was the very interesting piece on Next Gen Networks from Bill Triffet that actually prompted me to put fingers to keyboard. It mentions FTTH (Fiber to the Home). I have been in the fiber optics business for quite a long time. FTTH has been one of those technologies that is always 5 years away. Guess what, it is still probably 5 years away. The reason is that the cost associated with building a fiber infrastructure to the home or to the curb, FTTC, is huge, but there are a couple of private companies who claim to have solved the cost problem, Optical Solutions is one. It could be that with the increase in capacity of the long distance pipe now completed, the next bottlenecks are the metro area networks and the link to the home. To make you drool, I have seen some projections (from Japan) of 2.5Gb/s to the home by 2015. That sort of bit rate has to be on a fiber system. To Katherine’s point, in the end it comes down to who will pay. What will make subscribers like all of us spend enough money to pay for the service provider’s investment? I am not sure anyone has the answer. For example no one expected Napster to drive internet bandwidth in the way they did. Perhaps the next killer ap is just around the corner. I hope that I can contribute more to the group in the future. John - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tom Worley Sent: Thursday, November 22, 2001 3:23 AM To: CANSLIM Subject: Re: [CANSLIM] OT- Fiber capacity (Used to be Steel) My thanks, also, John, for this detailed explanation. Helps put the very diverse group into better perspective. I picked up TTIL for part of my "not quite CANSLIM" portion of my VR fund first on 8/6/01 and added to it 10/15/01. Overall, the position is already up 35%. While its earnings forecast and sequential and year over year earnings and sales were strong and growing, it lacked RS and GRS to be very good CANSLIM at the time. The RS has now substantially improved, making it #4 in the group on RS, and #1 in the group on EPS. However, GRS remains low at 37. The earnings forecast of 40% growth this year, and 25% next year, have both been recently raised. Latest qtr showed earnings growth of 52%. I knew this company from some years ago, so felt comfortable violating a lot of CS rules in buying it, and also averaging down, when I did so. I am being rewarded now by fresh market recognition of its growth. I would add to all the comments on the industry that, while there is a lot of dark fiber in the USA (much of which is likely to remain dark for years to come), there are many developing parts of the world that still have no fiber optics laid, and also lack good communications systems. As they progress, I would expect fiber optic cable to be laid rather than copper wire, thus I wouldn't count Corning as "out for the count" just yet. Fiber optics also appears to be the material of choice for all new undersea cabling, I presume due both capacity and transmission quality. Tom Worley stkguru@netside.net AIM: TexWorley - ----- Original Message ----- From: Katherine Malm To: canslim@lists.xmission.com Sent: Thursday, November 22, 2001 12:36 AM Subject: Re: [CANSLIM] OT- Fiber capacity (Used to be Steel) Thanks, John, for this insight into the group. From a CANSLIM perspective, understanding the focus of attention in this group will be key in finding good growth candidates. It seems the promise of broadband is hampered by the ability of players to get broadband into the hands of consumers at a reasonable cost (last mile problems). Then, once there, finding applications that make it something the consumer will want to use in a way that will generate revenues for various businesses. As you pointed out, video and music show the consumer will use it if they have it. I can think of at least half a dozen additional business models that could be successful if broadband were as commonplace as electricity, but there is just too much in the way right now. Any additional insight you can give from a technical perspective will help in identifying progress in this direction. I appreciate your explanation of TTIL, as they've been popping up in my screens in the last couple of months. I've been researching them, reading the IR site and news stories, but I didn't completely understand their place in the puzzle until you explained it in this way. Thanks. Katherine kmalm@earthlink.net - ----- Original Message ----- From: John Maycock To: canslim@lists.xmission.com Sent: Wednesday, November 21, 2001 10:32 PM Subject: RE: [CANSLIM] OT- Fiber capacity (Used to be Steel) If I could add what I hope is some insight to this discussion. This has nothing to do with CANSLIM except as background information. There are two major issues facing the transport side of the telecomm industry, dark fiber and network capacity. Dark fiber is fiber that has been laid in the ground but is not yet carrying traffic. Network capacity is the transmission capacity available on “lit” fibers. As a fiber manufacturer Corning (GLW) is at the very end of the food chain, (70% of revenues IIRC). They had a really good run when everyone was installing new fiber cables. When new fiber cables are ordered, the incremental cost of installing additional strands of fiber is relatively low, a few cents per meter per fiber, compared to cable installation costs that can range from $2 to $10 and over per meter. Therefore to avoid having to install another cable, most service providers installed cables with many more fibers than needed, hence future proofing themselves against what they perceived as future demand and threats from the newly financed CLECs. That demand has not yet materialized and the competition has fizzled. As the fiber in the cables have near infinite capacity and at least a 40 year lifetime, I predict Corning will be in a sorry state for some time to come despite their attempts to diversify. Corning is a special case among the fiber optic companies. The situation is a little different for the equipment manufacturers. They will profit from growth in network capacity. Contrary to what you might think, demand for network capacity is still growing. The internet is still growing at 100% per year, though voice and transaction data are back to their regular 7%. The current big drivers for capacity are music downloads and potentially video downloads. By mid 2002 some routes in the US will require upgrades. However, the ILEC’s are in the catbird seat and are driving prices down as the equipment manufacturers fight for business. The big names in the optical transport equipment business are IMHO the ones most likely to survive, (Nortel, Lucent, Ciena, Alcatel and Fujitsu). There are others who have good market shares in non-North American markets who will also be around. The mantra of the industry is cost reduction. To make the battle for survival more interesting, there are predictions that Capex from the big 11 US carriers will drop a further 30+% YoY in 2002. Not only have we not yet seen the predicted consolidation among the equipment manufacturers, further consolidation is likely among the service providers. Only a few will survive. Despite all this gloom, there are some interesting stocks in the telecomm space. Network management software company TTIL was mentioned here recently. They allow service providers to reduce their operating costs. I do not mean to tout it, but it does stand out as having a decent earnings record in the face of a declining market. Please IBD, don’t write it up! John - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm Sent: Wednesday, November 21, 2001 9:54 AM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] Steel Thanks Bill, I'll look forward to taking a look. Lots of dark fiber out there and too much legislation hampering the last mile. A good combo of legislation that makes the last mile installation more cost effective for the providers, some good technological applications and further capacity take-out/industry consolidation should put the dark fiber to good use. GLW is a start...glad to see their change in strategy lately. D'you also see that they're refocusing their attention into other product lines as well? Very nice. Again, thanks for the link, Katherine - ----- Original Message ----- From: Bill Triffet To: canslim@lists.xmission.com Sent: Wednesday, November 21, 2001 11:51 AM Subject: Re: [CANSLIM] Steel Katherine, I receive this newsletter via email but is online as well called the Wave Report. This issue has a blurb about the telecom and fiber optics industry. Its http://www.wave-report.com/other-html-files/Currentwave.htm Talks about the meltdown of the telecom service providers and the bandwidth glut. Says Corning is closing a fiber plant for 3 months. - -Bill - ----- Original Message ----- From: Katherine Malm To: CANSLIM List Posting Sent: Wednesday, November 21, 2001 9:24 AM Subject: [CANSLIM] Steel I've been watching the steel industry with great interest this last year for signs of economic recovery. Today, NUE, X, AKS are gapping up and breaking their downtrends. Granted, this is on news of consolidation in the industry, but it's exactly what you'd want to see to show signs of a bottom. Taking out excess capacity in any industry is a sign of a change in tone. Now, if we can just see more signs that "taking out excess capacity in telecom and fiber optics is occurring, I'd be *very* happy. Katherine - ------=_NextPart_000_001C_01C1738E.877003E0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable

Thanks to all for your = comments.

 

Tom has correctly pointed out that fiber is the medium of choice = for transmission both in submarine and in greenfield sites. This will have = some impact on Corning’s sales, but it is not an area I have studied. I = can comment on the projected 3-5 yr annual growth rates for equipment sales on = various continents, which will be reflective of where capacity expansion is = occurring. North America is expected to be about 12%, Europe 7%, Asia 25%. Asia is obviously the place to be. (Note that these are market study numbers and contain assumptions that may prove to be wrong.) There are also some = emerging Asian transmission equipment manufacturers but they are not traded in = North America. You can bet the NA companies are already there as well. =

 

It was the very interesting piece on Next Gen Networks from Bill = Triffet that actually prompted me to put fingers to keyboard.  It mentions FTTH (Fiber to the = Home). I have been in the fiber optics business for quite a long time. FTTH has = been one of those technologies that is always 5 years away. Guess what, it is = still probably 5 years away. The reason is that the cost associated with = building a fiber infrastructure to the home or to the curb, FTTC, is huge, but = there are a couple of private companies who claim to have solved the cost problem, = Optical Solutions is one. It could be that with the increase in capacity of the = long distance pipe now completed, the next bottlenecks are the metro area networks and = the link to the home. To make you drool, I have seen some projections (from = Japan) of 2.5Gb/s to the home by 2015. That sort of bit rate has to be on a fiber = system. To Katherine’s point, in the end it comes down to who will pay. = What will make subscribers like all of us spend enough money to pay for the service = provider’s investment?  I am not sure = anyone has the answer. For example no one expected Napster to drive internet = bandwidth in the way they did. Perhaps the next killer ap is just around the = corner.

 

I hope that I can contribute more to the group in the future. =  

 

John

 

-----Original Message-----
From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tom Worley
Sent: Thursday, November = 22, 2001 3:23 AM
To: CANSLIM
Subject: Re: [CANSLIM] = OT- Fiber capacity (Used to be Steel)

 

My = thanks, also, John, for this detailed explanation. Helps put the very diverse = group into better perspective.

 <= /p>

I = picked up TTIL for part of my "not quite CANSLIM" portion of my VR fund = first on 8/6/01 and added to it 10/15/01. Overall, the position is already up = 35%. While its earnings forecast and sequential and year over year earnings = and sales were strong and growing, it lacked RS and GRS to be very good = CANSLIM at the time. The RS has now substantially improved, making it #4 in the = group on RS, and #1 in the group on EPS. However, GRS remains low at 37.  = The earnings forecast of 40% growth this year, and 25% next year, have both = been recently raised. Latest qtr showed earnings growth of = 52%.<= /p>

 <= /p>

I = knew this company from some years ago, so felt comfortable violating a lot of CS = rules in buying it, and also averaging down, when I did so. I am being rewarded = now by fresh market recognition of its growth.<= /p>

 <= /p>

I = would add to all the comments on the industry that, while there is a lot of dark = fiber in the USA (much of which is likely to remain dark for years to come), = there are many developing parts of the world that still have no fiber optics laid, = and also lack good communications systems. As they progress, I would expect = fiber optic cable to be laid rather than copper wire, thus I wouldn't count = Corning as "out for the count" just yet. Fiber optics also appears to = be the material of choice for all new undersea cabling, I presume due both = capacity and transmission quality.<= /p>

 <= /p>

Tom Worley
stkguru@netside.net
AIM: TexWorley

----- Original Message -----

=

To: canslim@lists.xmission.com

Sent: Thursday, = November 22, 2001 12:36 AM

Subject: Re: [CANSLIM] OT- Fiber capacity (Used to be Steel)

 <= /p>

Thanks, John, for this insight into the group. From a CANSLIM perspective, understanding the focus of attention in this group will be key in = finding good growth candidates. It seems the promise of broadband is hampered by the = ability of players to get broadband into the hands of consumers at a reasonable = cost (last mile problems). Then, once there, finding applications that make = it something the consumer will want to use in a way that will generate = revenues for various businesses. As you pointed out, video and music show the = consumer will use it if they have it. I can think of at least half a dozen = additional business models that could be successful if broadband were as commonplace as electricity, but there is just too much in the way = right now. Any additional insight you can give from a technical perspective = will help in identifying progress in this direction. I appreciate your explanation = of TTIL, as they've been popping up in my screens in the last couple of = months. I've been researching them, reading the IR site and news stories, but I = didn't completely understand their place in the puzzle until you explained it = in this way. Thanks.

 <= /p>

Katherine= <= /p>

kmalm@earthlink.net= <= /p>

----- Original Message -----

From: John Maycock =

=

To: canslim@lists.xmission.com

Sent: Wednesday, = November 21, 2001 10:32 PM

Subject: RE: [CANSLIM] OT- Fiber capacity (Used to be Steel)

 <= /p>

If I could add what = I hope is some insight to this discussion. This has nothing to do with CANSLIM = except as background information.

 

There are two major = issues facing the transport side of the telecomm industry, dark fiber and = network capacity. Dark fiber is fiber that has been laid in the ground but is = not yet carrying traffic. Network capacity is the transmission capacity = available on “lit” fibers. As a fiber manufacturer Corning (GLW) is at = the very end of the food chain, (70% of revenues IIRC). They had a really good run when = everyone was installing new fiber cables. When new fiber cables are ordered, the = incremental cost of installing additional strands of fiber is relatively low, a few = cents per meter per fiber, compared to cable installation costs that can range = from $2 to $10 and over per meter. Therefore to avoid having to install = another cable, most service providers installed cables with many more fibers = than needed, hence future proofing themselves against what they perceived as = future demand and threats from the newly financed CLECs. That demand has not = yet materialized and the competition has fizzled. As the fiber in the cables = have near infinite capacity and at least a 40 year lifetime, I predict = Corning will be in a sorry state for some time to come despite their attempts to = diversify.

 

Corning is a special = case among the fiber optic companies. The situation is a little different for = the equipment manufacturers. They will profit from growth in network = capacity. Contrary to what you might think, demand for network capacity is still = growing. The internet is still growing at 100% per year, though voice and = transaction data are back to their regular 7%. The current big drivers for capacity = are music downloads and potentially video downloads. By mid 2002 some routes = in the US will require upgrades. However, the ILEC’s are in the catbird = seat and are driving prices down as the equipment manufacturers fight for business. = The big names in the optical transport equipment business are IMHO the ones most = likely to survive, (Nortel, Lucent, Ciena, Alcatel and Fujitsu). There are = others who have good market shares in non-North American markets who will also be = around. The mantra of the industry is cost = reduction.

 

To make the battle = for survival more interesting, there are predictions that Capex from the big = 11 US carriers will drop a further 30+% YoY in 2002. Not only have we not yet = seen the predicted consolidation among the equipment manufacturers, further consolidation is likely among the service providers. Only a few will = survive.

 

Despite all this = gloom, there are some interesting stocks in the telecomm space. Network = management software company TTIL was mentioned here recently. They allow service = providers to reduce their operating costs. I do not mean to tout it, but it does = stand out as having a decent earnings record in the face of a declining = market. Please IBD, don’t write it up!

 

John

 

 

-----Original Message-----
From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm
Sent: Wednesday, November = 21, 2001 9:54 AM
To: = canslim@lists.xmission.com
Subject: Re: [CANSLIM] = Steel<= /p>

 <= /p>

Thanks Bill, I'll look forward to taking a = look.<= /p>

 <= /p>

Lots of dark fiber out there and too much legislation = hampering the last mile. A good combo of legislation that makes the last mile installation more cost effective for the providers, some good = technological applications and further capacity take-out/industry = consolidation should put the dark fiber to good use. GLW is a start...glad to see their = change in strategy lately. D'you also see that they're refocusing their attention = into other product lines as well? Very nice.<= /p>

 <= /p>

Again, thanks for the link,<= /p>

 <= /p>

Katherine

----- Original Message -----

<= /p>

 

To: canslim@lists.xmission.com

Sent: Wednesday, = November 21, 2001 11:51 AM

Subject: Re: [CANSLIM] Steel

 <= /p>

Katherine,<= /p>

 <= /p>

I receive this newsletter via email but is online as well called the Wave = Report. This issue has a blurb about the telecom and fiber optics industry. Its = http= ://www.wave-report.com/other-html-files/Currentwave.htm  Talks about the meltdown of the telecom service providers and the = bandwidth glut. Says Corning is closing a fiber plant for 3 = months.<= /p>

 <= /p>

-Bill<= /p>

 <= /p>

----- Original Message -----

<= /p>

 

To: CANSLIM List Posting

Sent: Wednesday, = November 21, 2001 9:24 AM

Subject: [CANSLIM] Steel

 <= /p>

I've been watching the steel industry with great interest this last year for = signs of economic recovery. Today, NUE, X, AKS are gapping up and breaking = their downtrends. Granted, this is on news of consolidation in the industry, = but it's exactly what you'd want to see to show signs of a bottom. Taking out = excess capacity in any industry is a sign of a change in tone. Now, if we can = just see more signs that "taking out excess capacity = in telecom and fiber optics is occurring, I'd be *very* = happy.<= /p>

 <= /p>

Katherine= <= /p>

- ------=_NextPart_000_001C_01C1738E.877003E0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ End of canslim-digest V2 #1841 ****************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.