City of Light: The Story of Fiber Optics

254 CITY OF LIGHT
they didn’t need yet. The industry would need time to recover, but Ryan
remained optimistic. ‘‘Unlike the concept of selling dog food on the Internet,
telecom isn’t going away,’’ he declared. 47 The audience laughed, a bit uneasily.
The aftermath of the bubble took a heavy toll on companies that had
boomed. JDS Uniphase wrote off more than $50 billion, more than the gross
domestic product of Kuwait. Big companies including JDS Uniphase, Corning,
Lucent, and Nortel laid off two-thirds to three-fourths of their employees as
their stocks sank to a few percent of their peak values. Corning briefly
stopped producing fiber because its warehouses were full. 48 Dozens of startups
died stillborn. Global Crossing sank into bankruptcy under the load of
$12 billion in debt, making it the fifth largest bankruptcy in American history
in January 2002. WorldCom beat that record in July 2002, becoming
the largest corporate bankruptcy in American history as its financial statements
turned out to be the stuff of fantasy. Corporate executives, stock market
analysts, and accountants were charged with assorted frauds. Investors
were left badly burned, and seriously disillusioned with telecommunications
and fiber optics.
The 2003 Optical Fiber Communications Conference was a shadow of itself
in the bubble years. Attendance was half the year before, leaving wide-open
spaces in Atlanta’s sprawling convention center. Shell-shocked survivors tried
to persuade themselves it couldn’t get much worse as they walked past empty
booths. It felt like a smoking crater.
An orgy of wild financial speculation created the bubble. In hindsight,
investors didn’t just fail to use critical judgement—they seem to have taken
leave of their senses. Hard questions should have been asked about who was
going to buy dog food on the Internet and why they would bother. If any
small boys asked why the emperors of finance were parading naked down
the street, no one paid them enough heed.
What strange vapors created the heady air inside the bubble? There were
many factors, and their importance will be debated for years. Wall Street was
in the mood for a strong bull market, and bid stock prices upward with little
thought or analysis. Baby boomers needed retirement investments. Optimism
spun wildly out of control. After a lucky few reaped huge profits, others
crowded into the market, smelling money. Easy money bred greed, and greed
shaded into fraud. Top executives fudged financial statements, and enlisted
analysts and accountants to pump up stock values. Too many people wanted
instant rewards, and pumped money into companies that chanted fashionable
buzzwords no one understood. Eventually the people who had paid too much
for stock could no longer find ‘‘greater fools’’ willing to buy the overpriced
paper.
All of us who spent time inside the bubble have our own theories. But at
least at the time, we were inside the bubble because we wanted to believe in
it.