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Finisar Should Play Hardball, Then Exit

October, 2015

Finisar’s current business model based on the all-encompassing optical components approach in the datacom/telecom market with a large amount of vertical integration from chips to subsystems, along with designing every conceivable flavor demanded by the space of a particular data rate, has become unsustainable. It is bad enough in a relatively slow growing business, particularly with 100G, to need to start developing the next form factor, so quickly after the supplier releases the last one, but also there is competing in a highly fragmented arena, especially against a lot of Asian manufacturers, which tend to put low prices way ahead of profits. Then to also have some of the major customers in recent years become competitors (either directly or indirectly) – probably makes it sheer insanity to continue such an operation. With Jerry Rawls taking over the reigns again at Finisar, and...

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More 400G Insanity at ECOC

October, 2015

At the recent ECOC Exhibition 2015, there was the continuation of the prevailing optical industry’s preposterous, public narrative that the deployment of 400G is within sight. There can be no doubt that in the foreseeable future that there will be an extremely small number of ports at that data rate found on routers, and perhaps even in data centers, and many analysts and reporters in the market can be counted on to disingenuously declare that the market for that speed has really arrived. Nevertheless, in looking at the current migration path and the historic pace of change, it is quite logical that volume deployment of 400G even within 20 years could easily be a stretch, and that it may be so far out as to be irrelevant in current transport planning by both service providers and large enterprises for future bandwidth requirements. When it came to the aberration of aberrations, the...

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Will Cisco Systems Rule DCI Market?

December, 2015

When Cisco Systems recently published the specifications of its Network Convergence System 1002 (NCS 1002), it theoretically could be called a Data Center Interconnection (DCI) “killer,” but only for a few of the high-end content service providers, which are heavily involved with 100G. Yet shortly afterwards, Coriant announced its Groove G30 platform, which it also characterizes as “game-changing,” and according to its specs, will offer a similar capacity density, as well as comparable inputs and outputs. Nevertheless, for 10G and 40G clients, which represents the vast majority of the rest of the DCI business, the advantages for both companies over other vendors is, practically speaking, negligible or non-existent. (Furthermore, on longer spans beyond the capability of 16-QAM and 250-gig per channel, Fujitsu Network Communications' 1FINITY T100, along with the G30, offer the...

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Finisar: De Facto Owner of VCSEL Space?

December, 2015

Given that we have learned that Avago Technologies intends to keep only the VCSEL chip fab (in March, we were the first news source to report that the supplier was selling such bare die to other module vendors) in its deal with Foxconn Interconnect Technology, our contention is that there is a good chance that a true duopoly likely no longer exits in the space, and that Finisar may by far become the overwhelming dominant vendor in the space. Simply put, we do not believe that Foxconn’s business model lends itself to becoming a real force in the transceiver business in general. Moreover, its ability to retain the “Avago” legacy, when it comes to 850nm wavelengths that goes back to the mid-1990s with the initial R&D efforts by Hewlett-Packard (later Agilent), will be a tremendous challenge. There is the caveat that extricating the VCSEL fab from the TOSA and subassemblies may be...

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Reactions to Ciena Based on Elusive Credibility Factor?

December, 2015

A recent blog article on Light Reading gets into whether the initial backlash on the Street against Ciena was justified based on the past quarterly results as well as on the projected performance of the vendor. In our opinion, and as we have discussed in the past, despite rather exemplary leadership on the technology portion of the company over the years, it has been held hostage for a very long time by management on the financial and marketing sides of the business with a shockingly insufficient amount of intimacy with the optical industry. We also believe that there is a serious tone-deafness when it comes to its interactions with the investment community, such as in inadequately addressing the “severe deceleration in growth rate” in its core business over about the last four years on the past earnings call. Finally, there are the “rookie” kinds of mistakes regarding strategic...

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