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HOTS 01/2001

Issue: January 2001

By: Frank Bisbee


Featured Story


CommScope, Inc. (Hickory, NC) recently announced that it has been notified by AT&T Broadband that AT&T will not accept product deliveries under open purchase orders from many of its suppliers, including CommScope, for the balance of this year. While an AT&T slowdown will have some negative effect, CommScope does not expect this event to change its previously provided overall fourth quarter earnings guidance.

"AT&T has advised us and others that it has excess inventories for many of their materials and is correcting the situation by this action," said Frank M. Drendel, CommScope's Chairman and Chief Executive Officer. "We have offered our cooperation in this regard and have been advised by AT&T that they expect to begin accepting deliveries by mid-January of next year.

"We are not changing our fourth quarter guidance because we have been shipping at stronger than expected levels to this point in this quarter," Drendel commented. "We now expect shipments to slow over the remainder of the fourth quarter." In CommScope's October 23, 2000, third quarter earnings press release and conference call, it gave guidance that it expects year-over-year sales growth in the mid-teens and diluted earnings per share in the $0.40-$0.44 range for the fourth quarter ending December 31, 2000.

"Orders, including orders from AT&T, have been less than anticipated thus far in the fourth quarter," Drendel added. "While we remain excited about the worldwide opportunities for broadband HFC products, we have concerns about current order rates and the ability of certain customers to get new financing for some of their projects. Under these circumstances, we are reducing our sales and earnings growth guidance for 2001 to the mid-teen range from the 20% previously given."

The economy is slowing. The stock market has gone down and the sky is falling. A recent article in another trade publication focused on cabling business has predicted a dramatic slowdown in the cabling industry. The article went further to say that the market was saturated and the end users did not require additional cables to meet their upcoming LAN needs.

The cabling industry is alive and well. Other than the winter seasonal slowdown, the market is healthy and growing at double-digit rates. Recent interviews with key "players" for large and small cable manufacturers as well as the big distributors, reveal a level of high confidence across the board. Transportation, wholesale, retail, education, medical, and a host of other industry sectors have major plans to implement technology through computer networks to improve their profits and meet the challenge of competition.

Cable Design Technologies (CDT - Pittsburgh, PA), a worldwide provider of high-speed network connectivity products, has reported net income for its first fiscal quarter ended October 31, 2000 of $16.2 million, or $0.36 per diluted share, representing an increase of 25% over last year's first quarter net income of $13.0 million, or $0.30 per diluted share.

Sales for the first fiscal quarter 2001 were $214.7 million versus $187.6 million last year, an increase of 14%. Excluding the impact of unfavorable foreign currency translation, mainly due to the continued weakness of the Euro and British Pound Sterling against the U.S. dollar, sales would have increased approximately 17% over last year.

Paul Olson, President and CEO of CDT commented, "We are very pleased with our first quarter results and our ability to exceed consensus expectations. This is especially rewarding since we were able to outperform expectations after incurring costs associated with the addition of management for our European and fiber optic operations, the creation of a new fiber optic facility, and an unfavorable foreign currency impact."

Ideal Industries, Inc. (Sycamore, IL) has introduced their new Models 630 and 620 Craft Testsets to address the increasingly common problem technician encounter when connecting testsets to a digital link, and consequently causing an expensive, time-consuming collapse of the digital data circuit.

The IDEAL Models 630 and 620 feature integral filters (patent pending) specifically designed for safe analog voice circuit testing on Digital Subscriber Line (DSL) connections. These Craft Testsets allow the safe transfer from Monitor to Talk modes without damage to the data.

Model 630 also features SIGNALSHIELD™, a detection technology that issues an audible and visible warning alarm to the technician when in close proximity to a digital circuit while in Monitor mode. Many analog voice circuits are routed near digital information network wiring; yet technicians must exercise care because the wiring may be mislabeled or not identified at all.

Representing the only DSL testing solution for installers, security personnel and repair technicians, Models 630 and 620 Craft Testsets offer professional-quality engineering designed to meet craft standards. They are lightweight and slim for easy transportation and storage. Plus, they deliver the advantages of a duplex speakerphone with a battery-powered amplified speaker for both Talk and Monitor modes. Other key features include: three pre-programmed, one-touch "speed-dial" numbers, and repertory memory dialing with 10 memory locations (23 digits per location).

Built for real-world conditions, these IDEAL Craft Testsets are made from moisture-resistance, fiberglass-reinforced ABS to ensure reliable performance in the worst kinds of weather. Unlike other tests, both IDEAL TestSets have a non-slip rubber shoulder pad that fits comfortably on the shoulder, along with a recessed keypad that prevents keypad damage and accidental button contact.

The IDEAL Models 630 620 Craft Testsets come with field-changeable cordset, an extra large belt clip and are protected by a one-year warranty.

Berk-Tek (New Holland, PA), a Nexans company, has recently announced that its LANmark™-1000 series riser and plenum enhanced UTP copper and patch cables are the first to receive independent certification as meeting the Telecommunications Industry of America (TIA) Category 6, Draft 7 standard.

The LANmark-1000 UTP product family offered by Berk-Tek was upgraded to cover the latest draft 7 of the TIA/EIA 568-B.2-1 Category 6 and Draft N506 of ISO/IEC 11801 Category 6. Berk-Tek received certificates of conformance from ITS ETL SEMKO for riser, plenum and patch cables.

ITS ETL SEMKO tests and certifies cabling products for performance and product safety to TIA/EIA, NFPA, NEMA, UL, ISO/IEC, IEEE, ASTM, BICSI and ANSI standards.

"Berk-Tek always tests their products to the latest standards to maintain their leadership in the industry," said Eric Lawrence, RCDD, Berk-Tek technical marketing manager. He said that Berk-Tek approached ITS ETL SEMKO to create a Cat 6 verification program. As the first participant of the program, Berk-Tek has consistently verified its products with each new requirement.

"Almost any time there have been significant revisions to the standards of the Cat 6 cable, regarding performance or other requirements, we've been one of the first to be ETL verified," Lawrence said.

A major new study of the world's information and communication technology (ICT) spending reveals that the global high tech industry surged to over $2.1 trillion in 1999, and is expected to surpass $3 trillion in 2003. As this expansion occurs, the industry will find itself almost doubling in size between 1992 and 2002, from $1.3 trillion to over $2.4 trillion.

Digital Planet 2000: The Global Information Economy, produced by the World Information Technology and Services Alliance (WITSA) in cooperation with IDC, provides the most recent, comprehensive data documenting the size and shape of the global ICT marketplace. The study also found that ICT spending now represents 6.6% of world Gross Domestic Product (GDP), including almost 9% of US GDP.

"The Digital Planet has arrived," said WITSA President Harris N. Miller. "With countries such as China and Brazil jumping into the top ten ICT countries, the New Economy has truly gone global. A compound annual growth rate of over seven percent faster than the growth rate of global GDP - indicates ICT continues to outpace most economic sectors. And the potential for future growth is still extraordinary."

"A company's ability to attain leadership in its industry is closely linked to how well it understands the use of information and communication technology in the marketplace," said Alfred R. Berkeley, III, Vice Chairman of The Nasdaq Stock Market, Inc. "That is why the New Economy cuts across industry sectors. Nasdaq is proud to be a sponsor of The Digital Planet 2000 study, which demonstrates the evermore influential role that information and communication technology will play in the 21st century."

"As a leading pure-play global services company, EDS is pleased to be a sponsor of the Digital Planet 2000 study produced by the World Information Technology and Services Alliance (WITSA)," said George Newstrom, EDS corporate senior vice president and president, Asia Pacific. "In order for EDS to bring together the world's best technologies for our clients managing the complexities of the digital economy, we must have access to key market information - such as that provided in the Digital Planet 2000."

Corning Incorporated (Corning, NY) recently announced that its Board of Directors has approved a plan to invest $450 million in capital expenditures to further expand its Concord, North Carolina optical fiber manufacturing facility, soon to be the largest fiber plant in the world. In addition, advanced funding has been approved for preliminary engineering activities and site selection for a new U.S. optical fiber manufacturing facility. The site selection for the new plant is expected to be complete and announced within the next few months.

The company previously states that it expects to grow its fiber manufacturing capacity by 20% in 2001. This announcement, in conjunction with current expansion programs will allow Corning to increase its fiber manufacturing capacity at a rate of at least 25% per year through 2004, in line with the fiber market demand forecast published by Kessler Market Intelligence.

"The increased fiber capacity made possible through the expansion of Concord and the addition of a new facility enables us to keep pace with the tremendous worldwide demand for Corning's optical fiber, particularly our leading edge LEAF® and MetroCorO fibers. Our significant contract announcements with key network providers confirm the strong value propositions of our fiber products," said Alan Eusden, Senior Vice President and General Manager, Optical Fiber, Corning Incorporated.

Construction on this Concord facility expansion is expected to begin immediately, with the additional capacity being realized in 2003 and 2004. Development plans for the new site are intended to begin in the first half of 2001, with initial production expected in 2004. This announcement is the latest in a series of Corning optical fiber expansions during 2000.

Cablesoft Technologies (Tempe, AZ) recently announced the appointments of Robert Vanecko and Kevin Considine as Vice President of Corporate Development and Vice President of Sales, respectively. Along with the recent hiring of Tom Reedy as CEO, the company continues to build its management team for the global rollout of iTRACS.

Previously with First Union Securities, Vanecko will work closely alongside CEO Reedy to develop Cablesoft's day-to-day business strategy. He will oversee the development of strategic relationships with hardware, software and system integrator partners. At First Union, he was vice president of the Chicago Capital Markets Group, where he was responsible for general business development in the Chicago metropolitan area and throughout the Midwest. Vanecko served as vice president of corporate finance with EVEREN before its acquisition by First Union in October 1999.

Considine rejoins Cablesoft to handle all sales and business development operations, and to strategically position iTRACS in evolving markets. He previously worked at e-business solution provider Enterworks as vice president of channel sales. Considine also held the position of senior vice president of global integrator alliances at Platinum Technology, which was acquired by Computer Associates.

"Cablesoft has developed an exciting new network management solution," said Vanecko. "My role will be to concentrate on major corporate transactions and help develop the company's infrastructure for the next stage in its growth cycle."

"Emerging technology is the basis for any successful campaign and iTRACS is this next generation management solution," said Considine. "Direct sales, along with OEM partnerships, will be the driving force behind our full scale rollout of iTRACS."

"Our corporate team must be in place in order to meet the challenges that are to come with our aggressive growth plans," said Tom Reedy, CEO at Cablesoft Technologies. "Both Bob and Kevin bring the knowledge, expertise and determination to successfully build this company into a highly profitable enterprise." Vanecko previously practiced corporate law for four years with Mayer, Brown & Platt (Chicago, IL). He holds a BA in Economics from Yale and a JD from Northwestern University School of Law. Considine holds a BS degree in Marketing from Western Illinois University and received a MBA in Finance from Northwestern University's Kellogg Graduate School of Business.

Microtest, Inc. (Phoenix, AZ) the technology leader in network test equipment, won the "Coolest Networking Product 2000" award for the MICROSCANNER™ Pro. The Home Automation and Networking Association (HANA) presented the HANA Wavelength award at the Electronic House Expo Fall 2000.

The MICROSCANNER Pro, the first product in the MicroTools™ line, is the all-in-one cable tester for network cable verification and troubleshooting for home networking professionals, datacom specialists and IT/network managers. The pocket size and durable tool features coaxial and twisted pair cable testing as well as trouble shooting for speaker wire, security networks and telephone cabling. It verifies continuity and wiremap; finds opens, shorts, crossed or split pairs and miswires; and measures length and distance to fault, using the most accurate means of measurement available today.

Jerry Obrist, Chief Engineer-Waterworks for Lincoln Water System, was elected to serve as UTC's (United Telecom Conference) new Vice Chairman during the Fall UTC Board of Directors meeting this week in Washington, DC. Obrist has been actively involved in UTC for many years, most recently serving as a member of the Board and the Chairman of UTC's Customer Automation Section. He is the first representative of a water company to be elected an officer of UTC since 1987. As Vice Chairman, Obrist will serve as a member of the UTC Board's Executive and Fiscal/Budget Committees. He was elected at this time to fulfill the unexpired term of Rick Yee who resigned as he is leaving the utility industry. His term will end in until June 2001.

Telephone companies in Washington State are taking the surprisingly anti-consumer step of trying to stop public utility districts from selling high-speed voice, data, and video connections directly to homeowners and businesses in rural Washington. These are services that the phone companies have been unable or willing to offer, but now that the utilities are moving to help their customers with new telecom services, the phone companies are running to the courts and the state legislature - and are still not offering the services. "The Washington telcos are essentially saying 'we don't want to offer new telecom services to our rural customers AND we don't want anyone else to,'" noted UTC President/CEO Bill Moroney.

The telephone companies allege that the public utility districts are breaking a state law passed earlier this year that allows public utility districts to lay fiber-optic networks and offer wholesale telecommunications to rural residents by selling directly to business, residential and institutional customers. The utilities argue that they are only creating a modern telecom infrastructure for others to offer the service. UTC's (United Telcom Conference) legal/regulatory staff will be monitoring this case and exploring the impact on all UTC members.

What you don't know can kill you, or really mess you up. We warned readers about communication cable that contains lead. Now, we have another safety alert to highlight.

Recently, CNN reported that an environmental group has warned women of childbearing age to avoid exposure to a chemical (found in some communication cables) that has been shown to cause birth defects in laboratory animals.

A report by the Environmental Working Group (EWG) said the chemical in question is called dibutyl phthalate or DBP. Phthalates are a class of industrial platicizers that were invented in the 1930s. They are often used in cable because they make cable flexible and are not always required to be labeled on the products.

Lab animals given dibutyl phthalate had higher numbers of offspring with birth defects, especially of the male reproductive system. In September 2000, The Centers for Disease Control and Prevention released the results of a study that tested 289 adults aged 20-60 for seven metabolites associated with exposure to various phthalates and found it was present in all of those tested, with women of childbearing age having the highest levels.

Jane Houlihan, Senior Analyst at the EWG, said women between the ages of 15-45 can be exposed to dibutyl phthalate through contact with various products (including some PVC communication cabling products). "We think that women of childbearing age should avoid all exposures to dibutyl phthalate when they're considering becoming pregnant, when they're pregnant or when they're nursing," Houlihan said.

Still, there are several unanswered questions about the chemical, including what level of exposure causes illness.

"By directly measuring levels of phthalate metabolites in urine, we have markedly improved our understanding of human exposure to phthalates and also improved our ability to determine potential health risks from exposure," said John Brock, a senior chemist at CDC.

Meanwhile, the Environmental Working Group says male birth defects have been on the rise since the 1970s. In Puerto Rico, one study found girls who were experiencing premature puberty had high levels of a different phthalate in their bodies. The EWG said the last tests for safe close exposure were done in rats in 1953. They're calling for more testing and clearer product labeling.

"We believe manufacturers should fully label their products and that the label should be legible for consumers," Houlihan said. "We're also advising that pregnant women avoid exposures to dibutyl phthalate even while they're trying to get pregnant, while they're pregnant or while they're nursing."

The CDC said additional studies are needed to examine possible sources of the exposures, as well as the need for more insight into the safety and health effects of these chemicals.

GS METALS continues to innovate site configurable management solutions with the introduction of the new HELIFLEX™ Connector.

HELIFLEX Connectors allow for fast installation without any tools…another FLEXTRAY first. Each section of FLEXTRAY is shipped with the HELIFLEX Connector at no cost. It simply spirals around wires at splice points for a strong, fast connection. The HELIFLEX Connector offers unparalleled site flexibility, whether splicing sections together or in configuring the bends and curves in a typical FLEXTRAY installation. The no cost availability reduces greatly the total installed cost of a FLEXTRAY system, while providing the secure and robust solutions that FLEXTRAY has continually provided.

FLEXTRAY is a wire mesh cable management system. As a recognized name in flexible wire management solutions, FLEXTRAY provides total on-site flexibility. Its design enables faster installation with less labor and materials. Simply cut and bend to create drops, bends, climbs and intersections.

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