A comparison of what the article says and what Lumenon is actually doing:
The article:
msnbc.com 
The optical components market grew 145 percent in 2000, to $5 billion, said Felice Phillip Meffe, Lumenon’s vice-president of business development and marketing. By 2004, he said, the market is expected to hit $24 billion.
This phenomenal market growth stems from the explosion in communications technology and the ability of fiber optic cable to carry more information faster than traditional copper.
LUMM’s recent earnings report:
biz.yahoo.com
As the Company continued to focus on product development, Lumenon did not realize revenues from operations during the fiscal second quarter ended December 31, 2000. The Company's overall loss for the fiscal second quarter ending December 31, 2000 amounted to CDN$7,036,000 (US$4,691,000) or CDN$0.19 (US$0.13) per share, compared to CDN$12,539,000 (US$8,688,000) or CDN$0.53 (US$0.37) per share for the same period in 1999.
Article:
Tools using fiber optics are growing so fast than systems manufacturers like Nortel, Cisco and Lucent can’t meet the demand. So Lumenon, a two-year-old company, has developed a patented manufacturing process that it hopes will double industry capacity, according to Reginald Ross, Lumenon’s vice-president of corporate development and chief of strategic operations.
Actually, Nortel, Cisco and Lucent are the three companies who’ve downgraded expectations. If the author understood the industry, he would have used different examples.
The article:
The growth in demand is outstripping the growth in capacity, which is running at a 50 percent-plus annual rate,” Ross said. “As a result, Lucent and Cisco have warned of their inability to meet demand. I’ve seen studies that indicate the optical components market will be capacity constrained for another two years.”
Growth is outstripping demand in some product areas, but Lucent and Cisco aren’t supply constrained, it’s the components suppliers like JDSU who are.
Article:
“Our process is to provide volume,” Meffe added. “What differentiates us from other array wave guide manufacturers is our product will perform the same form, fit, function and be capable of meeting technological change.”
Same as what? In order to make sense, the author needs to be specific on what speeds and power levels their products have.
Article:
The company aims to produce 500 units per day, or 100,000 devices per year, in a market that’s large enough for 200,000, he said.
In what time frame will the company reach 500 units per day? Are they saying they’ll take 50% of the market? If so, that’s a pretty big assumption considering they’ve had no revenues to date.
Article:
Joseph Biernat, an analyst with Kimball & Cross Investments in Boston, said Lumenon’s process of producing photonic chips through photo lithography is much less labor intensive than methods currently in use by Lumenon competitors like JDS Uniphase.
“The only question now is whether they can pull it off. Other companies like Bookham have been trying to revolutionize the (mass-production) process but they are behind schedule. If (Lumenon) can deliver, their shares are tremendously undervalued,” he said.
Big “if.”
LUMM's latest 10-Q:
biz.yahoo.com
Besides the discussion of warrants, I found this of interest:
To date, we have not derived any revenues from our relationship with Molex. We are currently engaged in discussions with Molex regarding the structure of the teaming arrangement and the appropriate form of relationship going forward.
Why haven’t they received any revenues from Molex? What’s the status of their teaming agreement? What’s the status of the products Molex is supposed to be buying? Have they passed beta testing? If so, when will they ship in volume? If not, what's the problem?
The only order I can find is for a customized sample product:
biz.yahoo.com
Pat |
