Revenues within the global optical components (OC) market retracted 0.2% sequentially in the third quarter of 2011, according to Ovum’s Market Share Alert: 3Q11 Global OC. The drop, which followed a double-digit sequential revenue decline in the second quarter of the year, is part of a downturn that should last into the first half of 2012, the market research firm added.
Ovum cited macroeconomic uncertainty as the main cause of the revenue shrinkage in the third quarter of this year, when revenues fell by $1.57 billion. However, Ovum expects the effects of the flooding in Thailand on component production capacity to compound the effects of the continuing poor economic factors, leading to another double-digit revenue decline in the final quarter of 2011.
And conditions won’t improve at the start of 2012, as Daryl Inniss, Ovum analyst and author of the market alert, expects that price pressures will add a third depressant to market revenues.
“We are hearing about strong price pressures in the current negotiations among the key players, and this will take effect in 2012,” Inniss explained. “Most of the negotiations are at the lower end of the traditional price decline scale. This aggressive pricing is a signature of the competitive environment, exasperated by supply constraints due to the Thai floods. These lower prices will affect both revenues and the bottom line."
Inniss did offer optical component companies a measure of consolation. “We believe there will be strong growth between the second and third quarter of 2012,” he said. “The pent-up demand will drive the market to a strong second half of 2012, even as macroeconomic uncertainty persists.”
The 3Q11 wasn’t bad for everyone, the market alert points out. For example, Fujitsu Optical Components saw its revenues jump 28% sequentially and 50% year-on-year. On the other hand, Oclaro suffered the most disappointing quarter among the top 10 suppliers. It saw revenues decline 6% versus the previous quarter, Ovum reports.
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