Yehuda Fruchter

Stratos International: A Smallcap Optical Value Play (STLW)

Thanks for your comments. They have a good pipeline in the FTTP area, as mentioned. They got this via a deal with some overseas manufacturer. In general, I do not believe or agree that US third tier suppliers, like STLW, should be investing in R&D anymore. It´s a losing proposition. They are better positioned to serve as "distributors" for low-cost overseas manufacturers due to their relationships with Tier 1 suppliers. In other words, the business model is changing due to the "China" factor. US companies in the optical space either need to move to China (like OPLK did) or act more like distributors. But, to answer your question more directly, despite the above, this is more of a short-term risk arbitrage play than a long-term investment.