Jerry now discusses the future of Finisar, given the altered landscape. JDSU just bought Picolight, a leading designer and manufacturer of optical pluggable transceivers for $125 Million. Infinera, which integrates optical and electronic functions in its proprietary InP-based photonic ICs, intends to raise $150 million through an IPO filed on February 26, 2007. The number of US households subscribing to fiber connections will increase from 3 Million in 2007 to 18 Million by the end of 2011, Parks Associates says. Is Optics heating up again?
SM: What markets are you entering next? JR: The biggest new thing for us is our exposure in the telecommunications market. I explained in the early days we did not want to enter that market because it was dominated by AT&T, Lucent, Nortel, but none of those companies make optical components anymore. They all went out of business. Some of their facilities are now operated by smaller companies.
Nevertheless, one of the things we have done, is we’ve taken the successes we had where we built a business as the number one supplier of optics in computer networking, and are starting to go elsewhere with it. Those networks we powered began to expand across the campus and the city and we started making longer distance optical devices to support that. It turns out that we quickly ran into a central office in the phone company, and the next thing you know, we are making devices we can sell to the telecom equipment companies.
Whereas right after the bubble, maybe 2002, we might have had two telecom equipment companies as customers, in our last quarter we had 28 telecommunications companies to whom we shipped more than $100K of product in the quarter, each. Telecommunication equipment area is one in which we now have our nose under the tent. We are supplying products, our business is growing faster than our overall business, developing new products and new relationships, and we have really high hopes that that is sort of the next market for us to achieve the same level of success that we were able to achieve in the computer network market.
SM: And the telecom infrastructure buildup has also resumed. JR: Yes it has. You know the internet traffic has started to grow, and grow rapidly; the contribution of YouTube and Google, and a few of these companies and that means that the investment in optical infrastructure is now absolutely resumed.