Fiber-Optics Supplier Ortel Starts to Shine

Wall Street has seen the light, and it’s hurtling down fiber-optic lines, bringing fast Internet access to a growing number of speed-hungry customers. Now investors are racing to buy shares of Ortel Corp. and other firms that make equipment for those advanced communications networks.

For Alhambra-based Ortel, the boost from traders has been electric, sending the company’s share price up nearly tenfold to $60 in a little over six months.

In Nasdaq trading Thursday, the stock jumped $12.75 to close at a record $59.88 on heavy volume.

Part of the attraction is the general euphoria hitting all manner of telecommunications stocks these days. But in Ortel’s case, analysts say the run-up is also being fueled by improved financial results under new management and growing speculation that Ortel could be bought--or that its investment in Tellium Inc., another optics firm, could yield big bucks if that company is sold or goes public.

“There is a lot of interest in this space,” said Dave Kang, an analyst who follows fiber-optic equipment companies for Cruttenden Roth Inc. “Some people think Ortel is next [to be bought], and then there is the Tellium factor.”

Ortel owns 18% of Tellium, a New Jersey firm spun off from the former Bellcore, the research unit once run by phone companies.

Analysts say that stake looks valuable now that Cisco Systems and others are buying up small optical firms, and as the shares of a Tellium competitor, Sycamore Networks, have zoomed to $233.75--and a market value of $18 billion--just weeks after their initial public offering at $38 a share.

Ortel makes digital receivers, lasers and other equipment used by cable and phone companies in their high-speed data networks. General Instrument is one of the company’s largest customers.

New managers came in about six months ago, following two quarters of losses, and the team has streamlined Ortel to focus on the telecommunications and cable broadband market.

The company’s moves seem to have paid off: Ortel recently estimated it would book more than $19 million in sales and post profit of around 2 cents a share for the quarter ended Oct. 31--its second straight quarter in the black.

Analysts now expect Ortel to finish fiscal 2000 with revenue of $75 million and earnings of 8 or 9 cents a share, followed by 2001 results of $100 million in sales and profit of 30 cents a share.

“There’s a lot of buzz in the market . . . the confluence of events have put us on the [Wall Street] radar screen,” said Steve Rizzone, Ortel chairman, president and chief executive. “But our job is not to get caught up in it, and to stay focused.”

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Ortel’s Flight

Weekly closes and latest on Nasdaq

(symbol ORTL):

Thursday: $59.88, up:$12.75

Source: Bridge Information