Optical components top $1bn for second sequential quarter

UK: Ovum RHK released its preliminary analysis of fourth quarter 2007 results for optical components vendors. The optical component (OC) market overall finished 2007 strong with quarterly revenues of $1.1 billion, up 3 percent sequentially and 4 percent versus 4Q06. Full-year 2007 topped $4.0 billion, up 4 percent compared to 2006.

According to Daryl Inniss, Vice President and Practice Leader for Communications Components at Ovum RHK, inventory effects are still impacting revenue growth although the impact is not as strong as experienced in 1H07. "We still believe that market conditions are positive up the food chain. Traffic growth, dominated by IP data, continues, and traffic demand from wide-scale demand for video is yet to come, " he said.

"Equipment vendors in all segments are reporting strong revenue gains, another indicator that the market is continuing to expand. However, a North American recession and the impending credit crunch can negatively impact telecom market expansion, particularly in 2H08," added Inniss.

4Q07 revenue and share highlights for optical components market top ten vendors:

* Of the top 10 vendors, MRV (Luminent), Finisar, and Optium all achieved double-digit sequential revenue growth (15 percent, 13 percent and 12 percent, respectively).

* Intel rebounded from a weak 3Q with sequential growth of nearly 30 percent in 4Q07.

* Opnext, one of the few vendors unscathed by the inventory reductions that plagued 1H07, experienced its first down quarter since early 2006. Opnext revenues were down 13 percent sequentially, but were still good enough for an 8 percent increase over 4Q06.

* MRV (Luminent) and Oplink, the vendors with the largest revenue increase over 4Q06, were this quarter's largest rolling 4Q share gainers. Both vendors' share gains come principally from acquisitions -- Fiberxon for MRV (Luminent) and OCP for Oplink.

* The share gains by Sumitomo and Optium are impressive as they appear to be organically derived. One might argue that Optium's growth was based on its acquisition of Engana and Kialight, but the revenues of these entities were essentially zero at the time of the acquisition. For Sumitomo, its growth may be attributed, in part, to its introduction of an SFP+ transceiver.

* JDSU, who was hit hard by the inventory correction in 1H07, posted the largest share loss (-.2 percent) despite posting a strong quarter.

* Optium, after gaining share the past two quarters, displaced Furukawa from the number ten spot.