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A theoretical analysis of gain-switched semiconductor lasers is described. Results of the numerical solution of the coupled rate equations for photon and electron densities are presented, along with analytical expressions which have been derived by using certain approximations to solve these nonlinear differential equations. The two sets of results are seen to be in good agreement. The design requirements to be met in order to use the pulse-code-modulated output in an optical communications system are discussed. It is shown theoretically that bit rates, of the order of 7 Gbits/s without time-division multiplexing, and 35 Gbits/s with multiplexing can be obtained.