Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Analyst for Bill Choi – Jefferies and Co.
Analyst for Bill Choi – Jefferies and Co.
My first question is about your forecast for improving market conditions. Is there any region in particular that you see where one region is better than the other in improving demand conditions?
Jerry Rawls
We saw telecom sector fall off first last winter but we saw the telecom sector come back earlier this year so it remains strong and it has remained strong not only in Europe but also in Asia, Japan and the U.S. Sales have been good in telecom. We saw a lot of strength in the last quarter in Ethernet sales. Ethernet 10 gigabit was really the high spot in that market. So all of a sudden that has to be data center applications, enterprise applications, installing 10 gigabit trunks as opposed to multiple 1 gigabit links. That is focused mostly in North America.
Analyst for Bill Choi – Jefferies and Co.
With respect to your increased ROADM sales can you explain if this is a one-time or other temporary issue where certain of your customers are ordering in bulk right now based on their own purchase requirements or does this signify some kind of structural change in the market where ROADM type of products are increasingly in greater demand and will continue to be so for a few quarters or even one or two years? How do we interpret this increased selling in ROADM?
Eitan Gertel
If you look at the ROADM market today you see that all the systems being deployed are utilizing ROADM. Historically the use of ROADM in the 100 gig space was the majority of those ROADMs. As the markets are coming back, as Jerry was saying telecom was coming back first, we saw that business pick up. In addition we are shifting today to a lot of customers who are 50 gig 1 x 9 ROADM. We see a lot of the new systems are using the 50 gig ROADM rather than the 100 gig ROADM and we see a major ramp up in demand for those products.
As we look forward and talk to our customers and look at our order pattern we believe as far as we can see right now this is more long-term pattern rather than a temporary thing. We are still watching how it develops but it looks like it is sustainable and customers are buying products [inaudible] products and our biggest problem right now is raising capacity as fast as we can.
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