Optical Networking Market To Decline

Communications Today, April 2, 2002

The optical networking market will drop another 20 percent in 2002 to $19.9 billion, after declining 18 percent in 2001, according to new research from Merrill Lynch [MER]. Key indicators point to a late recovery, perhaps late 2003 or early 2004.

Long haul transport, which is mostly wave division multiplexing (WDM) products, will suffer the brunt of the blow and decline 33 percent to about $9.1 billion this year. This suggests trouble for long haul leaders Ciena [CIEN] and Nortel [NT].

However, both companies will make up ground in the optical switching segment of the industry, which Merrill Lynch projects will grow 23 percent to $684 million in 2002. Ciena's CoreDirector product is strong in that market, but Nortel, Lucent [LU], Alcatel [ALA], Sycamore [SCMR] and Corvis [CORV] will provide competition. >TK Ericsson [ERICY]: Alcatel [ALA]: Cisco [CSCO]: