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Greg Dougherty takes a more prominent role following the retirement of president Jay Abbe
June 12, 2001
JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU) announced today major shifts in its management team, spurred by the retirement of key player Charles J. Abbe, president and chief operating officer of the company’s passive optical component business (see JDSU Makes Management Moves ).
The news affected the company’s stock price only slightly, sending it down 0.04 (0.26%) to 15.16 by late afternoon. At the CIBC World Markets investor conference in New York City today, fund managers and investors listening to JDSU’s formal presentation seemed more concerned with the company’s inventory issues and pricing pressures than they were with the management changes.
Abbe, who turned 60 years old this year, had been chief executive officer of Optical Coating Laboratories Inc. (OCLI) before it merged with JDSU in February 2000. At the time of the merger, he told JDSU executives that he would only stay on board for about two years, said Anthony Muller, executive vice president and chief financial officer, who spoke at the CIBC conference.
“Jay taught us a lot and provided stability through the chaos of all the acquisitions. We will miss him,” said Muller. “I’m sure his phone is already ringing off the hook with startups wanting him on their boards.”
The company has split up Abbe's duties between two other top executives. Jozef Straus will now do triple duty, bearing the titles cochairman, chief executive officer, and president. This latest move will allow Straus to get more involved with customers and sales, said Muller. Scott Parker, vice president of global sales and marketing, will now report directly to Straus.
Greg Dougherty, chief operating officer of the company’s active component business, including amplification and transmission products, is now taking on the COO duties for the entire company. Dougherty, who had been COO of SDL Inc. before the company merged with JDSU earlier this year, will be running all the day-to-day operations for the company (see JDSU: Less from More). Dougherty, key in SDLI's success, is now seen as taking a major role and leading the company toward a recovery.
This is a very big deal for the company,” said Jim Jungjohann, an analyst with CIBC. “After 30-some acquisitions the company is still integrating and getting its house in order. Now they need to really run with it.”
The company also announced that Don Scifres, cochairman of the board, will take on the roll of chief strategy officer in charge of mergers and acquisitions, as well as the technical direction of the company.
JDSU has been hit hard by the downturn in carriers' capital spending (see JDSU Cuts Guidance Again). Its stock has dropped from $111 a share at the time the SDLI merger was announced last summer to about $14.82 today (see JDSU/SDL: A Component Powerhouse). The big question investors have on their minds is when things will turn around -- specifically, when the company will work out an inventory glut that has accumulated as a result of the capex spending crunch.
In the formal presentation at the CIBC conference, Muller touched on this issue and said that inventory overbuild would not be worked out until at least the end of September. When asked about pricing issues he would not provide any additional information.
“There is nothing new to report in terms of pricing,” he said. “We’ve heard systems companies are seeing a 20 to 25 percent price reduction, and that isn’t too far from what we’ve seen historically.”
Fund managers are still avoiding the company and are a bit skeptical about the company’s prospects in the next few quarters. “I’ll believe it when I see it,” said one manager, who says he has been focusing on small-cap companies during these tumultuous market conditions. “Who knows when you’ll really see a recovery. It’s the question of the day.”
The shifts in management are just one part of the realignment and consolidation plan that is expected to cost the company between $375 and $425 million in charges, but is expected to save the company $250 million annually, said Muller in his presentation (see JDSU Deepens Reorg). The company has also taken steps toward eliminating overlaps in development of competing products from companies it's acquired, and consolidating manufacturing and management offices where it can.
- Marguerite Reardon, Senior Editor, Light Reading
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