RealTime IT News

Baby Bells Light Up Optical Sector

The Baby Bells ignited speculation in telecom equipment companies this week when they agreed on standards for local optical networks.

Although analysts cautioned that the cash-strapped Regional Bell Operating Companies (RBOCs) may not be able to afford the widespread replacement of copper wires to the home with fiber optics, nonetheless the agreement by Verizon , SBC and BellSouth sparked strong buying in the telecom equipment sector. Alcatel and JDS Uniphase were cited as two that might benefit from the build out of local optical networks.

The RBOCs do have some incentive to pursue local optical networks. The FCC requires local telephone companies to share legacy networks with rivals, but plans to allow companies that build fiber optic networks to keep them proprietary. And the Baby Bells are also under intense pressure from cable companies to offer greater high-speed services. The Baby Bells plan to issue a request for proposals next month for equipment for the new optical networks.

The broader market soared Friday on a better than expected Midwest manufacturing report.

The Nasdaq surged 20 to 1595, the S&P 500 rose 13 to 963, and the Dow gained 135 to 8850. Volume rose to 1.69 billion shares on the NYSE, and 2.3 billion on the Nasdaq. Advancers led 25-7 on the NYSE, and 22-9 on the Nasdaq. Upside volume was 77% on the NYSE, and 72% on the Nasdaq. New highs-new lows were 386-5 on the NYSE, and 269-9 on the Nasdaq.

AOL rose 2.5% on its groundbreaking settlement with Microsoft . RealNetworks fell 9% on worries about closer digital media ties between AOL and RealNetworks rival Microsoft.

McData and Novellus soared on positive earnings guidance.

3Com fell 10% on a warning, dragging Cisco lower.

Yahoo slipped 1% on valuation concerns.

Netopia surged 14% on a DSL deal with EarthLink .

Sun rose 2.8% despite security concerns.

AskJeeves slipped 2% on concern about its search plans.

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