JDSU Launches Regime Change

CEO Jozef Straus and COO Syrus Madavi are leaving, while ex-Cisco exec Kevin Kennedy takes the reins

August 21, 2003

3 Min Read
JDSU Launches Regime Change

With the pending retirement of CEO Jozef Straus, the book is closing on the era of megamergers that created JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU).

Straus announced his Sept. 1 departure in a crack-of-dawn conference call with analysts. His replacement will be Kevin Kennedy, chief operating officer at Openwave Systems Inc. (Nasdaq: OPWV) and a former CEO hopeful at Cisco Systems Inc. (Nasdaq: CSCO).

Straus is expected to remain on JDSU's board.

JDSU COO Syrus Madavi will be leaving at an undetermined future date -- probably the result of being snubbed for the CEO spot. (On the call, Straus confirmed Madavi had been considered but passed up.) Formerly chairman and CEO of Burr-Brown Corp., Madavi moved to JDSU after his company was acquired by Texas Instruments Inc. (NYSE: TXN).

Another effect of Straus's departure is that JDSU no longer will split headquarters between Ottawa (Straus's home) and San Jose, Calif. All HQ functions will be moved to San Jose.

Straus is reportedly well liked by customers, but some observers have worried that he lacks the bean-counter mentality that's been required during JDSU's brutal restructuring. "Speaking with investors, it comes as no surprise to see Jozef announced his departure," wrote analyst John Jungjohann of CIBC World Markets, in a report this morning. (Jungjohann didn't elaborate on why his sources felt that way, however.)

Kennedy, by contrast, will take an active role in the restructuring, a job that had been Madavi's baby. On the conference call, Kennedy said JDSU has no immediate plans to replace Madavi.

The changes begin a new era at JDSU. Analyst John Harmon of Needham & Co. wrote Straus's retirement "represents the departure of the last of the old [guard] from the company’s progenitors," namely JDS Fitel Inc., Uniphase Corp., Optical Coating Laboratory Inc. (OCLI), and SDL Inc. As founder and CEO of JDS Fitel, Straus agreed to the merger with Kevin Kalkhoven's Uniphase in 1999, then became CEO of JDS Uniphase upon Kalkhoven's 2000 departure (see Kalkhoven to Depart JDS Uniphase).

With Straus leaving, the selection of Kennedy is no surprise. He was already on JDSU's board of directors, making him a known quantity. And he understands JDSU's business from the customer side, having spent seven years at Cisco and 17 at Bell Labs. Finally, it's been speculated that Kennedy wanted a CEO position, one of the reasons he left Cisco in August 2001. (See Cisco's Kennedy Ready to Leave?, Reorg Rips Through Cisco's Ranks, Kennedy Lands at Openwave and JDSU Adds to Board.)

No one says the job will be easy, though. JDSU's Global Realignment Program isn't finished, and the company faces continuing weakness in its telecom markets. "It appears that the decline in JDS Uniphase’s markets will outpace cost cuts through the end of fiscal 2004," Harmon wrote.

Investors seemed heartened by the changes. JDSU's stock was up 29 cents, at $3.48, late today, trading on nearly twice its normal volume.

— Craig Matsumoto, Senior Editor, Light Reading

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