But analysts say the long-term prospects for optical telecommunications are strong. Automation, they say, is inevitable. In fact, analysts say manufacturing-line equipment makers such as Palomar could be on the cusp of an emerging industry. They compare Palomar, Irvine's Newport Corp. and others to companies, such as Applied Materials, that automated semiconductor manufacturing 20 or 30 years ago. This will become an industry unto itself.
Analysts disagree over the industry's potential.
Much of that came during the last half of the year. Even with the economic slowdown, however, Gist predicts that Palomar's sales will exceed last year's levels. At its Vista factory, Palomar's new laser diode assembly machine looks like a cross between a flight simulator and a biotech workstation. The company's wire bonders and other automation equipment are smaller, but of similar sophistication. Done as part of Hughes Palomar actually developed this technology while part of Hughes Technology Products Division for specific projects inside Hughes.