Thursday, July 10, 2008

Optical consolidation heats up

There is another merger in the optical components space, as Opnext is purchasing StrataLight. This is another small step in a consolidation trend, which I favor, as I own four stocks in this area and would like to see more rationalization. An article at Light Reading also speculates that disagreements over possible mergers may have been a factor in the recent management shakeup at Avanex (4.4% of portfolio). With any luck, the dozens of smaller competitors in this space will consolidate into ten or less companies over the next few years. There is a very long way to go to get there; hopefully transactions like this one will spur others to merge.