JDSU Cuts Guidance Again
The revised guidance is lower than JDSU's original quarterly estimates, which had already been reduced. Following its acquisition of SDL Inc. (Nasdaq: SDLI) in February, JDSU said it expected EPS of 17 cents on revenues of about $1 billion. Like last night's guidance, those expectations included the merged SDLI revenues (see JDSU: Less from More).
Analysts say they expected the reduction. JDSU was reportedly hard hit by the revised guidance from key customer Nortel Networks Corp. (NYSE/Toronto: NT) in February (see Nortel's Nasty Surprise). Also, it's been struggling to keep pace with market forces, to the point of laying off a sizeable group of employees in its passive components unit (see JDS Uniphase Announces Layoffs).
JDSU isn't alone in contending with market moodiness. Earlier this week, New Focus Inc. (Nasdaq: NUFO) reduced its outlook (see New Focus Slows Down). And late last month, Avanex Corp. (Nasdaq: AVNX) took a dive on similar warnings (see Avanex Shares Stumble).
"This news is clearly not JDS specific," wrote Joseph Wolf and James Hillier, analysts with UBS Warburg, in a research note today. "In recent weeks, we have seen downward revisions from [Corning, Avanex, and New Focus]. Our longer-term view is that the optical network is a long-term investment opportunity and that this is a bump, albeit a severe one, in that road."
Analysts say the belt-tightening and the revised guidance should help JDSU weather the storm. "We think the ongoing issues in the communications equipment industry -- carrier spending concerns, inventory reductions, and lack of visibility -- are already priced in JDS Uniphase shares," wrote Mark Langley and John Harmon, analysts with Epoch Partners, in a research note this morning. "We think it is just a matter of time before carriers resume a more aggressive spending posture, and JDS Uniphase remains one of the best-positioned companies to benefit when carrier spending resumes."
Questions remain, however, about how long the downturn will last before JDSU can see its way clear again. "These figures imply a more difficult June quarter," writes analyst Jim Parmelee of Credit Suisse First Boston in a note this morning. "We anticipate positive sequential growth to resume in the [first quarter of 2002]."
-- Mary Jander, senior editor, Light Reading http://www.lightreading.com