JDSU Hires M&A Guy
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