Down in the flood

We have heard the phrase "nuclear winter" used to describe what is going on in the telecommunications industry. Another metaphor is "surviving the perfect storm."

I prefer to look back to the hurricane that devastated Galveston, Texas, in 1900. As chronicled in the book Isaac's Storm by Erik Larson, this mammoth hurricane struck an ill-prepared coastal community that had grown complacent. Isaac Cline, himself a deeply thoughtful student of major storms and how they worked, was in charge of the Galveston weather station. Had he received proper warning of what was going to hit, he could have set up an orderly evacuation, saving countless lives. Instead, many early-warning signs were missed: Observers in Cuba predicted a big storm for the Gulf of Mexico, but the message was not believed and was not passed on by "experts" in headquarters. Isaac himself noticed the unusual form of the ocean swell the day before the storm hit, but imperfect understanding at that time of the physics of huge ocean-borne storms prevented his connecting this with what would become a flood that inundated a large part of Galveston.

There was horrible carnage when the storm did hit, but there were also survivors-those who found high ground in time, others who clung to the wreckage of shattered homes afloat in the flood. Eventually, the waters subsided, the sky cleared and rebuilding could begin.

What are the lessons? First, "experts" have limited ability to predict the future in truly changing times. During the recent boom in optical telecommunications, forecasts of endless revenue and earnings growth abounded. Telecom companies overbuilt, creating a "flood" of bandwidth capacity, and rushed to acquire smaller companies, using their bubble-inflated stock as currency. Many of these acquisitions have now been written down. There has been carnage, to some degree, in companies both large and small. We know the storm will end and the weather will improve. But no one knows exactly when, or what form the improvement will take.

Polychromix is a one-year-old supplier of components and subsystems for dynamic wavelength management in modern dense wave-division multiplexing systems. We are in the product-prototyping and early-sampling stage and so are on somewhat higher ground than some companies whose planned revenue for this year has vanished, leaving them financially adrift in the midst of high seas.

And we have the good fortune to be backed by investors who recognize the strength of our technology and our team and who are committed to keeping us afloat until the weather clears.