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Capex Slowdown Slams JDSU

Ray Le Maistre

JDSU had an uncomfortable Thursday as it watched its stock lose 16% of its value after it reported less-than-stellar fiscal third-quarter earnings and provided guidance for its final fiscal quarter that fell way below Wall Street's expectations.

The optical components and test systems vendor reported revenues of $418 million and net income after one-time costs (non-GAAP) of $0.10 per share for the quarter ending March 29, below what was expected, with JDSU blaming "later-than-expected carrier orders." The slowdown was particularly hurtful in the US. (See JDSU Reports Fiscal Q3.)

But it was the forecast of fiscal fourth quarter revenues of $425 to $445 million and non-GAAP earnings per share of $0.10 to $0.14 that prompted the sale of JDSU (Nasdaq: JDSU; Toronto: JDU) stock, as analysts had been expecting $459.1 million and non-GAAP earnings of $0.17.

JDSU's share price sank by 16% to $10.65 in mid-afternoon trading.

Things should improve during the second half of this calendar year, though, according to JDSU. Financial analysts are expecting a bump in revenues to come from China as the major operators there build out their transport and radio access networks to usher in mass-market 4G. (See China Mobile Dishes Out 100G Deals and China Holds Key to LTE TDD.)

"We continue to believe that JDSU is likely to benefit from strong demand for optical components and test equipment as China builds out their 4G network," stated James Kisner at Jefferies & Company Inc. in a research note issued Thursday.

"Management noted that China should offer upside in the second half of 2014, driven by both 4G/LTE testing equipment and 100G components as China Mobile ramps its coverage projects," added Simon M. Leopold in a Raymond James Financial Inc. (NYSE: RJF) analysis, but he noted that the expected additional revenues of up to $15 million per quarter appeared "uninspiring."

— Ray Le Maistre, Editor-in-Chief, Light Reading Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile

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Vishnu Goel
Vishnu Goel,
User Rank: Light Sabre
5/11/2014 | 3:15:15 AM
High Time Companies derisk and diversify in Asia!
Everytime a company in Asia shows a soft quarter or two,the guns are trained on the slow demand in the Middle Republic,we need to have mature and equally aggressive sales managers and business leaders who understand and practice diversity in business.Asia is not only China and there is enough cushion in Asia to take this slowdown in stride! Vishnu Goel T&M +919810101238
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