MOUNTAIN VIEW, CA - December 3, 2002. The optical components market will finally see growth again in 2003, with a 30% year-over-year increase in dollar volume, according to market researchers at Strategies Unlimited, a Silicon Valley-based consultancy. The growth will come as inventories are finally depleted and as the market begins to see new system orders.

During the recent telecom spending bubble, sales of products for optical telecommunications networks rose steadily, only to drop precipitously in 2001-02 as the bubble burst. Optical component manufacturers were affected even more than systems manufacturers, due to the huge inventories of components that had been accumulated during the bubble. By 2003, inventory burnoff will finally be complete, and growth is expected to resume.

"When we reviewed the market situation last April, we predicted that this market would begin turning around by 2003," said Tom Hausken, Optical Components Practice Director at Strategies Unlimited. "Our updated analysis reaffirms this prediction. The market will by no means return to the heyday of 2000 anytime soon. Even with 30% growth, we project component vendors' revenues in 2003 at $2.1 billion, far below the $9.1 billion peak we saw in 2000. Nevertheless, this is welcome news for component providers."

The report Optical Networking Components - 2003 Market Outlook examines the recent rise and fall of the telecom industry and provides a near-term outlook through 2004. The report takes a top-down look at the telecom industry, examining the revenues and capital expenditures of carriers, along with the current state of the optical equipment industry. It includes forecasts for 2003 and 2004for the optical components market as a whole, as well as for individual components. The forecasts c orrelate aggregate "bottoms-up" estimates of product sales with "top-down" worldwide trends in revenues, capital expenditures, and system build-outs to provide a more accurate picture of the quarters to come.

The report also reviews quarterly revenues and key financials of the major players in the industry. Strategies Unlimited has been able to decouple component installations from component shipments, thus providing greater insight into industry dynamics. This information is based on direct contact with companies across the entire optical networking food chain, as well as collaboration with Strategies Unlimited's sister company KMI Research, leveraging KMI's close relationship with equipment ven dors and carriers.

The steep dropoff of business in the past two years have led to an industry shakeout. Established companies such as Agere Systems and numerous startups have already chosen to - or been forced to - leave the business. With a smaller number of players in the market, those who remain a better chance of long-term survival.

Growth in this sector beyond 2003 will be more sustainable as a humbled industry pursues a more modest set of expectations. In 2004, carrier capital expenditures are expected to rise as new equipment is used to help meet carriers' headcount reduction targets, as well as to fulfill continued growth in customer demand. Delays in new builds have had devastating consequences for suppliers, but equipment upgrades ultimately will be made, leading to gradual relief for the industry.

Optical Networking Components - 2003 Market Outlook is available from Strategies Unlimited for $2,450. More information on the report is available by contacting Strategies Unlimited on +1 650 941-3438, or by email at sales@strategies-u.com.

Founded in 1979, Strategies Unlimited specializes in market research and strategic consulting directed at photovoltaic components and systems, optical networking, optoelectronic, and RF/wireless semiconductor industries. The company, based in Mountain View, California, is a research unit of PennWell Corporation.

PennWell Corporation, founded in 1910, is a highly diversified media and information company providing authoritative publications, conferences and exhibitions, databases, information products and Internet-based services to strategic markets worldwide. The company publishes over 45 periodicals including Laser Focus World, Lightwave, and Solid State Technology. These strategic markets include petroleum, electric power, electronics, communications, information-technology, w ater, fire services, manufacturing and healthcare. Its headquarters are in Nashua, NH, and Tulsa, OK, with remote offices and partners located around the globe.