Analyst Rankings: Telecom Equipment Moves Into the Future at Lightspeed

This week, in our focus on the winning analysts in each industry category from our Analyst Rankings -- Equity 2000, we profile the top analysts tracking telecommunications equipment stocks. Next week, we look at analysts covering computer hardware. (Check out our last focus, managed health care.)

Telecommunications equipment is a broad name that covers a group of companies involved in three distinct, although increasingly interrelated, businesses: wireless equipment, telephone equipment and data networking. All three fields are undergoing rapid technological change as Internet innovations bring the worlds of data and voice transmission ever closer.

The Winners

By name By category By firm Best stock pickers Best firms

The hottest field in this sector is fiber-optic networking, an area that has boomed in the past year as companies seek ways to send ever-increasing amounts of data through the cables that serve as the arteries of the Internet. Traditional networks send electrical signals through copper cables, while fiber-optic networks send light waves through glass fibers. Fiber-optic networks already exist in many areas, especially in long-distance pathways. But the existing networks use a combination of light and electricity to send their signals. By contrast, the "all-optical networks" being developed by many young start-ups promise to use only light beams for their signal transmission, though no such system has yet been implemented.

The stocks that our top-rated analysts favor most in the fiercely competitive and still-emerging all-optics field are July 28 IPO Corvis(CORV Quote - Cramer on CORV - Stock Picks) and October 1999 IPO Sycamore (SCMR Quote - Cramer on SCMR - Stock Picks). Shares of Corvis, singled out by first-place winner Gregory Geiling and third-place winner James Jungjohann, more than doubled on the first trading day, but recent prices have remained in a range little changed from the opening-day close. Geiling's other top pick, Sycamore, has risen more than tenfold above its offering price of $12.67, but that spectacular ascent belies an exceedingly volatile trading pattern: Shares went as high as $170 in March but then fell as low as $49 in April. They have traded lately in the $140 range.

Among more established optics names, Nortel (NT Quote - Cramer on NT - Stock Picks) is tagged by third-place winner Nikos Theodosopoulos. The company is the acknowledged leader in optical networking.

In wireless equipment, No. 2 analyst Alex Cena believes that third-generation mobile-phone technology will boost revenues for many of the major wireless players, especially European names Ericsson(ERICY Quote - Cramer on ERICY - Stock Picks) and Nokia(NOK Quote - Cramer on NOK - Stock Picks).

The analysts' major concerns in the sector include rich valuations and the possibility that telecom service providers will reduce their spending on all this new technology. (Signs of a looming cash crunch among network operators have already appeared: See our related stories.) Then, too, companies that have established a firm leadership position in one technology are always at risk of being bypassed in the next leg of the technological race.

Telecommunications Equipment

	1st Place
	Gregory Geiling J.P. Morgan (See Report Card)

	2nd Place
	Alex Cena Salomon Smith Barney (See Report Card)

	3rd Place (tie)
	James Jungjohann CIBC World Markets (See Report Card)

	3rd Place (tie)
	Nikos Theodosopoulos UBS Warburg (See Report Card)

	5th Place
	Tim Luke Lehman Brothers

	Best Teams
	Credit Suisse First Boston, Goldman Sachs, UBS Warburg (tie)

Rate Their Stock Picks:

Which stock do you like best? Geiling and Jungjohann: Corvis Cena: Ericsson Theodosopoulos: Nortel