January 20, 2000. I mentioned in my previous article that is was time for a "top
picks" prediction. Well, here we go, as promised, top picks for the coming decade.
Nortel Networks: This company dominates the market for the highest
speed fiber optic technology available that boosts speed and capacity on fiber optic cables. Nortel is the top
supplier of optical equipment for the hottest companies for the next generation of data transmission. Revenue from
that part of Nortel's business is already growing by more than 50% a year.
Nortel clearly seems to have outpaced rival Lucent in the area of high speed transmission, with
the latter dominant in the slower fiber lines used by most of the traditional telephone companies. Yet until recently,
Lucent, not Nortel, was the darling of Wall Street analysts. Chief Executive John Roth, a 30 year veteran and engineer,
will bring the company to greater heights with the idea that the Internet is the wave of the future and high speed
is the key.
Scientific-Atlanta: This company produces digital set-top boxes
and transmission equipment, including their best known product, the Explorer 2000. This is the only interactive
set-top system capable of delivering e-mail, e-commerce, and video on demand. The company sells the set-top box
for $300 each to cable operators, including Time Warner. Yet the business is in its infancy.
In their transmission sector, Scientific-Atlanta produces fiber-optic products and amplifiers.
This business is growing at an annual rate of about 35%.
Scientific-Atlanta's chief executive is James McDonald, who spent 21 years at IBM before joining
Scientific-Atlanta six years ago. Mr. McDonald predicts that the market will be bigger than PC's.
Inktomi: This four year old company links workstations into a kind
of super computer. Due to the explosive growth in size and complexity of the Web, Inktomi's super computer looks
as if it has found a vital and highly profitable function in the commercial world.
Inktomi is not exactly a well known brand name, however their super computers and proprietary
software actually perform the searches for a range of Web clients such as Yahoo, Excite, Snap, and AOL.
Although Inktomi has not turned a profit, or is expected to for another year, it is one of the
best ways to invest in the continuous growth of the Web. Inktomi has proprietary products that can not be easily
replicated and has established an early leadership position is their line of business. Inktomi should profit no
matter who ultimately wins out in what is likely to be bruising and costly war for brand name dominance.
LSI Logic Corporation: This chip maker has production capacity coming
on stream just as the semiconductor boom is taking off. Expect revenues to run higher than generally expected.
LSI serves seven fast growing chip segments, giving it a margin of safety in its terms of diversification of end
markets.
Microchip Technology Incorporated: A very strong player in the micro-controller
market, which is expected to grow in the 30% range in the years from 2000-2002.
KLA-Tencor: This semiconductor equipment supplier is a leader in
yield monitoring and process control systems. With fabrication plants in short supply, expensive, and time consuming
to build, improving die yield at existing plants will be a priority in this cyclical upturn in the chip industry.
George
