Welcoming a new decade

Several years of good business ahead...

Turning the page of my new calendar, I realized that it's a new decade. At least I think so, as I'm never quite sure when a decade starts and ends. For this commentary, I am assuming that 2011 is the start of a new decade. If it isn't, and 2010 was, I guess I should have written something about a new decade in January 2010.

In any case, I'm glad it's no longer January 2010, as we were then just beginning a recovery from the most severe recession in laser history. As last year progressed, things began to look much brighter, and as I sit in front of the keyboard preparing this editorial, 2011 looks like it can be a real winner for industrial lasers. (I'm told that many readers turn to "My View" first when they get the latest issue, so for them my editorial is a little like first reading the last page of a mystery novel where the culprit is identified. I'm sorry if I ruined the surprise of my Annual Economic Review in this issue starting on p. 4.)

As I've said and showed in my Economic Review, the strength and timing of the recovery in the industrial laser market took most companies by surprise; at least, that's what they said as the year ended. However, some of them knew that the recovery was underway, but chose not to publicly recognize their improved numbers throughout the year. Fortunately, I now track three dozen laser oriented public companies who are obligated to report their financials quarterly, giving me an early look at their current and future numbers. As a consequence, I picked up signs of optimism early in the year, and since I am not obligated to comply with SEC reporting rules, I began to advise that good things were happening at the mid-year point, when I reported the positive news at two conferences: AKL in Aachen and SLT in Stuttgart.

However, it wasn't until I finished compiling the backup data for my report that I realized the industry, led by the solid-state and fiber laser suppliers, was having a remarkable year growing their business sector by 25%. And in so doing, many of the companies that make up these two industry sectors set records for revenue, bookings, and profitability.

Last year, I visited an international solid-state laser systems supplier that, along with its peers, had experienced an almost devastating 2009. As the company president and I were walking the floor of an assembly hall, which was jammed with new systems being readied for international shipment, the president told me that the company was on a record run, so strong that he was moving up the date of a proposed IPO. This is one example of how strongly the solid-state and fiber laser suppliers grew in 2010, and this scenario is expected to repeat this year.

Admittedly, the semiconductor markets, a hot laser market since mid-2009, are predicted to cool off this year, and I planned accordingly by moderating my projections for this laser sector. The potentially very active market for high-power CO2 and fiber laser fabricated metal products is projected, at the very least, to return to normalcy, and, if true, this will offset any softening in the total laser revenue numbers caused by the semiconductor markets.

But back to this decade thing – according to my data, the industrial laser market has experienced only two severe downturns in 40 years, the first one 20 years ago. So the odds are the industry should experience at least a good decade of growth.

Even with the specter of potential international financial difficulties that could precipitate another downturn, an occurrence that is difficult to factor into my projections, I see several years of good business for the industrial laser community.

So a very happy new year to you all and here's to the start of a great decade.

David A. Belforte
belforte@pennwell.com

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