"...Friedman, Billings, Ramsey International Limited said today that makers of equipment used to manufacture optical disks -- including CDs and DVDs -- are positioned for long-term growth despite an unpredictable 2001. The 58-page report by Equity Analyst Olivier Vallee, Optical Disk Equipment: Jockeying for Position, focuses on the makers of equipment used to produce disks such as CD, DVD, CD-R and DVD-R, CD-RW and DVD-RW, and advanced multilayer, magneto-optical, and fluorescent formats. The shift from CD to the more advanced disk formats requires significantly more complex technologies owned by fewer companies worldwide. The equipment for these formats is much more expensive.
Given this context, the report states there is high projected growth in each format, with disk-based products projected to well exceed the older products they are designed to replace:
* only a third of CDs are produced as record albums;
* market projections for CD-R exceed the floppy disk market by a factor of three;
* and DVD is expected to widely exceed the VHS market.
The report, one of a series of in-depth research reports from FBR's expanding London office, suggests investments should be targeted at those companies with the deepest ownership of the technologies, the most industrial orientation and most diverse markets. In addition, technology ownership is necessary for high margins required to maintain quality in the face of diminishing margins of error and to master the next demanding formats..."