After giving an optimistic 2013 forecast, JDS Uniphase Corp. convened analysts Thursday to tell them why the outlook is so upbeat.
In part, it's because optical networking is looking up, judging from the analysts' reports that were published Friday morning.
"The organization remains very upbeat about a resurgence in Telecom demand this year," writes James Kisner, an analyst with Jefferies & Co. Inc.
Test and measurement makes up 45 percent of JDSU's sales, so of course, a lot of the optimism comes from that sector. But optical components have a pretty good outlook, too.
Kisner noted that Alan Lowe, president of JDSU's Communications and Commercial Optical Products division (CCOP), said "the sales 'funnel' in Optical Communications -- not just in ROADM line cards but 'across the board' -- is the largest it's been years."
"It now sounds like there is more confidence in Optical Communications as carriers bring JDSU into discussions with its OEM customers (i.e., Ciena) to customize products like TrueFlex ROADMs and Super Transport Blades for 2013 deployment," writes analyst Mike Genovese of MKM Partners.
JDSU will be looking for acquisitions, but mostly on the communications test side, and maybe in some specific areas such as commercial lasers and anti-counterfeiting technology. (JDSU has a hand in a lot of weird markets such as anti-counterfeiting pigments and gesture-recognition technology.)
But executives said they "would rather not consolidate the optical component market," even though most executives and analysts have agreed for years that some trimming would do the sector some good.
"Industry consolidation would strengthen optical players as companies become more efficient, take advantage of scale, reduce R&D spending, command better pricing, and thrive instead of fighting for survival," writes analyst Simon Leopold of Raymond James Financial Inc.
Any acquisitions would more likely be in the communications test sector, particularly on the wireless side, JDSU executives told analysts.
Separately, PacketPortal -- cloud-based software that feeds data about the network to monitoring and management tools -- is growing rapidly, although JDSU indicated sales won't exceed $15 million in fiscal 2014, which ends June 2014, Kisner writes.
Kisner thinks JDSU is low-balling it. "Heard acknowledged that they have individual projects with individual customers that are that large. The biggest uncertainty here appears to be the relatively complicated nature of software revenue recognition; we understand this guidance assumes that revenue recognition "dribbles" in without recognizing any large orders," Kisner writes.
JDSU officials said they'll be announcing a PacketPortal version to monitor wireless small cells, Kisner writes. That announcement should be coming at Mobile World Congress the week of Feb. 25.
PacketPortal now has 14 customers and has been in 36 trials that are underway or have completed.
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— Craig Matsumoto, Managing Editor, Light Reading