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JDSU Hires M&A Guy

Light Reading
News Analysis
Light Reading
1/29/2004

JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU) chief executive Kevin Kennedy has now done two things analysts were waiting for: recruited a Cisco Systems Inc. (Nasdaq: CSCO) cohort and, apparently, prepped his company for some acquisitions.

In JDSU's earnings call yesterday, Kennedy announced the hiring of David Gudmundson as vice president of corporate development. He described Gudmundson as a Cisco vice president with "acquisition experience" but didn't elaborate on what his duties will be.

Gudmundson was a product manager in Cisco's access division in 1998, concentrating on areas including the digital subscriber line (DSL) business. More recently, he'd taken on duties cutting across the spectrum of telecommunications, according to a JDSU spokesman. Kennedy, of course, came from Cisco himself, recruited last summer to replace former JDSU honcho Jozef Straus, and analysts thought it likely he might bring other Ciscoids into the fold (see Kevin Kennedy Gets His Dream Job).

Gudmundson's hiring adds to recent signs that JDSU is ready to make deals. In October, the company raised $475 million to bring its cash and short-term investments to $1.6 billion. The money came from a $400 million coupon offering with a $75 million overallotment exercised. As usual for such deals, JDSU officials said they could use the money for acquisitions but that no such deals were imminent. (See JDS Rumors Fly (and Crash) and JDS Prices $400M in Notes.)

Analysts have yet to get a good look at Kennedy's strategy, as he's been concentrating on JDSU's internals: visiting the far-flung empire and revamping some of the compensation and bonus policies. For example, in any given year, JDSU's top five executives, ranked by salary, will receive no more than 5 percent of the company's stock, a move intended to "broaden the distribution of equity" among employees, Kennedy said. He has also installed new employee performance metrics based on profitability and customer satisfaction surveys.

Kennedy announced yesterday he has eliminated the COO position, which has been vacant since Syrus Madavi's departure in August. Madavi's job for the past two years was implementation of JDSU's restructuring plan, which is nearly complete (see JDSU Launches Regime Change).

Kennedy also noted that business is picking up. Customers are asking for shorter lead times, and, he claims, some JDSU products even saw shortages. For its second quarter ended Dec. 31, JDSU reported losses of $58.5 million, or 4 cents a share, on revenues of $153 million, compared with losses of $215 million, or 15 cents per share, on revenues of $157 million for the same quarter a year ago (see JDSU Revenues Rise in Q2).

JDSU shares were down 15 cents at $4.89 in early trading Thursday.

— Craig Matsumoto, Senior Editor, Light Reading

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truelight
truelight
12/5/2012 | 2:33:41 AM
re: JDSU Hires M&A Guy
This is jobs for the Boys - what a joke.
drone387
drone387
12/5/2012 | 2:33:39 AM
re: JDSU Hires M&A Guy
Dave Gudmundson from University of Missouri-Rolla, Class of 1983?
dodo
dodo
12/5/2012 | 2:33:36 AM
re: JDSU Hires M&A Guy
Did anybody watch him trying to describe access and the core network to K&C on CNBC last night?

I would have thought that being an ex-Bell head, he would be more articulate in his explanation.

Just a comment.
truelight
truelight
12/5/2012 | 2:33:35 AM
re: JDSU Hires M&A Guy
Sadly embarrasing....for CEO. Fact is has little experience. Better sell JDSU...
DiGiTaL^DoG
DiGiTaL^DoG
12/5/2012 | 2:33:17 AM
re: JDSU Hires M&A Guy
One thing I learned when I was employed by Cisco is that Kevin makes good decisions and quickly. He is the one Cisco-ite I miss other than the folks I went there with when Cisco purchased the company I was working for.

I expect that Mr. Kennedy will turn JDSU back into the black in the near future. As for a position whether to buy or sell, I would say start buying.
whyiswhy
whyiswhy
12/5/2012 | 2:32:54 AM
re: JDSU Hires M&A Guy
Thanks for your comment Kevin.

Truth is this company is sick, sick, sick. And selling telecom components at or below cost to stay in #1 spot got them there.

The only part of JDS doing well is non-telecom: the old OCLI group.

Kennedy is shopping the telecom group around. Kevin probably has a price from his old boss John he doesn't like, and Alcatel thought they should float a trial balloon.

Gunderboogerbingabag (pardon my spelling) is onboard to make the books look good.

Acquistion can mean sell or buy, depending on one's POV.

-Why
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