Amid an earnings call with gloomy overtones, JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU) CEO Kevin Kennedy announced today that he's resigning from the company.
Kennedy has gotten a job somewhere else and expects to leave JDSU in December. He made the announcement in the middle of today's earnings call with analysts.
His departure comes as JDSU prepares yet another round of cost-cutting, this time in response to the overall economic gloom. JDSU noted today that revenues in the second quarter, which ends in December, could fall compared with the $386.7 million reported for the first quarter. (See JDSU's Not Down and JDSU Reports Q1.)
The company will be cutting 400 employees and contractors as a result, Kennedy said.
Other cuts will include a reduction to 12 sites from 19, "reducing manufacturing sites by several," Kennedy said. No major product changes are planned, but JDSU will be cutting some of its lower-speed datacom products, which carry lower margins than highfalutin 8- and 10-Gbit/s models.
Light Reading will update this story as events warrant.
Before and immediately after the merger, everyone who was anyone made so much money they literally retired to take golf lessons and/or left to found their own place(s). There was not much left but the walls and the equipment.
Then the investors thought they should bring in an "experienced" CEO to take the bigger company it to the next level.
Problem was, there was nothing left inside to take to the next level, except the walls and equipment, and oh yea, the bank account.
Ergo, gotta buy it.
But if you buy it you have to keep the purchased team around and forward-incentivised to make it work. Or you end up with more walls and equipment, and less in your bank account.
Lesson for today: give talented folks a share of the payout, or they won't stick around, and there is no payout.
Excellent points, odo. Tunable lasers were a huge miss, in particular.
The problem with domination in this sector is that things are so fragmented. None of JDSU's optical customers have a Cisco-like market share (including Cisco; you know what I mean). That's got to make it tough.
Maybe -- and this is idle speculation with lunch on my mind -- maybe acquiring their way out wasn't the way to go? (Minus Acterna; that's their future in a basket, imho.)
And you're right about the stock. JDSU peaked somewhere near 40 after Kennedy joined and was in the teens this year before the market truly tanked. That kind of 5-year record, regardless of the reasons, is something we should have mentioned.
When Bookham and Avanex complain about the circumstances, my heart goes out to them. They have to struggle in a bad industry with nothing going right in any dimension - cash, margins, size, vanishing customers, etc.
But when in a struggling sector, the one gorilla with a multibillion dollar marketcap (and a lot of cash) can't dominate in terms of technology- and thought-leadership, isn't there a problem?
(By dominate, I mean new products, better margins, better customer traction, resulting in better stock price).
They did try to acquire their way out of this mess - Acterna, Agility, Picolight - and yet the stock price is a mere fraction. Part of this is clearly the stock market, but I don't believe this is all the stock market's fault.
For example, how do you condone a market leader for missing out on tunable lasers (Agility), VCSELs/pluggables (Picolight) and 40G (Mintera partnership)? And I am sure there are similar examples in other areas ..
So, in response to your question, I don't have the braincells to figure out, even 20/20, what Kennedy should have done. What I do feel is that a more connected CEO who understood market forces and customer trends could have done better.
1) meant that I don't blame him for taking another job when offered. Wouldn't you?
2+3) You could argue he ran JDSU into the ground. You could also argue that optical components, for the big companies in the last six to eight years, have been a no-win scenario -- certainly not the kind of job he, or anyone else joining the sector, signed up for. (Finisar, which wasn't in telecom, doesn't count.)
Personal opinion: I think Kennedy wanted to do the right thing, namely, ditch optics and concentrate on other businesses. Didn't turn out to be feasible.
If you think we're not being harsh enough, well, here's your chance. Let him have it, with the full benefit of 20/20 hindsight. What should Kennedy have done?
1) Hello? You don't blame him? Who then do you blame for a stock price that was at $35-40 in 2004 when he joined, coming down to $5.50 now?
2) He deserves better? How so? After completely mangling what coulda been a superpower in optical components, he deserves better?
3) Again, hello? The industry keeps hammering him? Maybe all CEO's in this space should use this excuse with their boards. Or maybe this will lead to a new breed of outside CEOs taking over and cleaning up this mess. That will be a good thing!
odo <-- still aghast at the kid-gloves being used!
Well, I can't say I blame him. He expected (and arguably deserved) better out of this position, but the industry just keeps hammering the optical guys.
The way this got announced was probably meant to minimize the drama but had the opposite effect. They ran through all the prepared remarks, including the CFO part with all its accounting jargon.... and then, they hand the mic back to Kennedy for what's usually a summary and the official start of the Q&A portion.
But instead he says, "Oh, by the way, I'm leaving!" (Not literally, but that was the effect.)
The blogs and comments are the opinions only of the writers and do not reflect the views of Light Reading. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
To save this item to your list of favorite Light Reading content so you can find it later in your Profile page, click the "Save It" button next to the item.
If you found this interesting or useful, please use the links to the services below to share it with other readers. You will need a free account with each service to share an item via that service.
Digg
Del.icio.us
Reddit
