Visibility isn't the only thing telecom investors are running low on. In some sectors, they're running out of horses to bet on.

The optical-parts business, once the hottest sector in this formerly sizzling industry, is practically on the verge of vanishing. A number of big players have recently dropped out of optical, leaving only a few struggling rivals where throngs of new-tech start-ups and diversifying giants once teemed.

Agere Systems ( AGRA) became the latest player to announce plans to fold up its opto operations. The Lucent Technologies ( LU) spinoff said Wednesday it was exiting the optical parts business due to a sharp drop in demand for lasers, amplifiers and modulators -- the gear used to transport info-bearing lightwaves through fiber-optic networks.

The famine, triggered by the late-1990s feast that created a huge overhang of excess capacity, is made all the worse by the collapse in network equipment spending and by a brilliant leap in technology that ran well ahead of utility. With the telecommunications business in broad retreat, the subgroups that once had so many adherents now appear all but irrelevant to the industry's flagging recovery story.

"Agere was one of the forerunners," says Lisa Huff, an optical components analyst with Communications Industry Research. "Not that it completely surprises me, but I thought they would have been strong enough to survive the downturn. This just tells me the downturn is worse than we thought."

Agere today -- Nortel ( NT) and Corning ( GLW) tomorrow?

Agere's departure follows similar moves in recent weeks by ADC Telecom ( ADCT) and Alcatel ( ALA) to sell or close optical parts businesses. Nortel is mulling exactly the same option and without any apparent buyers in sight; the Canadian telecom equipment maker could close up or dramatically shrink its optical component shop by year-end, say analysts. A Nortel spokesman said there was nothing new to report.

Corning has been busy closing fiber cable plants, and analysts expect the struggling networking parts supplier will extend that effort to its optical components business.

"I expect Corning will have to face the music very soon," said CIBC analyst Jim Jungjohann, who rates Corning and JDS Uniphase ( JDSU) hold and Agere a buy.

Corning says its optical component and photonics business has shrunk by half since peak levels in 2000. But a spokesman said he wasn't aware of any plans to sell or shutter the rest of the business.

The trip from hot to frigid has been head-spinning. Gearmakers like Lucent, Cisco ( CSCO) and Nortel were in an all-out race to provide "end-to-end" optical systems to phone and Internet service providers. Investors were quick to punish any gearmaker that seemed weak on optical switches or lacked a reasonable road map to the all-optical future of networks.

Emblematic of the time, networking tech camps were hotly divided between such things as mirror-based vs. bubble-based switching mechanisms. And gurus loudly argued over the pace of growth, some saying Net traffic was doubling yearly, others putting it at every three months.

Outfits like JDS Uniphase and Corning became must-own stocks because they were perceived to be the arms' dealers in a lucrative construction rivalry as dozens of network operators vied to outbuild each other.

Today, with phone companies locked in a downward debt spiral with their creditors, with revenue falling across all lines of business, these once brilliant technologies are almost worthless and the production facilities and once-coveted engineers a glaring liability, analysts say.

Typical of tech, a big part of the problem was that promise ran well ahead of demand.

New lasers could pump 10 billion bits, or 10 gigabits, of information every second down a single fiber strand that used to carry a fraction of that traffic. At the same time, innovations such as wave division multiplexing, or WDM, were turning single strands into 16 channels of information, effectively multiplying the existing capacity. Properly equipped, one fiber could sufficiently handle even peak traffic levels.

"WDM allowed phone companies to add capacity at low costs," says UBS Warburg analyst Mike Urlocker, who has a hold rating on Nortel. "WDM was so good, phone companies found they didn't need to buy other technologies or to add new capacity."

Meanwhile, the service providers, having borrowed and spent fortunes, weren't unearthing any new revenue veins to justify the investments.

It was the end of the gravy train. Optical system sales fell 30% in 2001 and are projected to fall another 45% this year, according to Shin Umeta with the Silicon Valley research shop Dell'Oro Group.

On the other hand, while Agere's decision doesn't bode well for the industry, it does help answer the cry for fewer suppliers to balance the absence of demand. The optical parts business might not entirely vanish, observers say, but it's clear that several players will have to go away. This is part of that trend.

"This should come down to a two-player market eventually," says CIBC's Jungjohann. "Probably JDS and a second strong consolidator."