Optical components

JDSU Inches Toward Profits

JDSU's second-quarter results brought the company a bit closer to profitability, but investors so far seem unimpressed.

For its second quarter, which ended Dec. 31, JDSU reported losses of $42.1 million, or 3 cents per share, on revenues of $312.9 million, compared with losses of $67 million, 4 cents per share, on revenues of $258.3 million the previous quarter. (See JDSU Reports Q2.)

For its second quarter a year ago, JDSU reported losses of $41 million, 3 cents per share, on revenues of $180.5 million.

JDSU's non-GAAP net losses for the second quarter were $3.7 million, or zero cents per share, matching analysts's per-share forecast according to Thomson Reuters . Analysts had expected JDSU to report revenues of $312.6 million.

Investors seemed a tad unhappy with the results, as JDSU shares fell 10 cents (3.2%) to $3.06 in early after-hours trading.

JDSU sees continued strong demand for optical components, and that might lead to some pleasant surprises next quarter. The company is forecasting revenues of $304 million to $321 million for its third quarter, compared with $309 million predicted by analysts. Moreover, analysts think JDSU will GAAP profits of $7 million next quarter, rounding off to zero cents per share.

For now, JDSU can only say it's "non-GAAP EBIDTA," profitable, CEO Kevin Kennedy told investors in a conference call today, but he treated that as a minor milestone. "A year ago, more than three-quarters of the company was focused on restructuring," he explained. "Today, more than half of JDSU's business is concentrated on sales and growth."

That doesn't mean cost-cutting is over, as cuts of another 380 jobs were announced just last quarter. (See JDSU Sells More, Cuts More.) The company continued to sell facilities and land, as it previously announced, and similar cuts will continue: "We must decrease our operating expenses," Kennedy said. JDSU investors have approved a reverse split with a ratio of 1:8 to 1:10 that could be executed any time before December 2006. Kennedy didn't indicate when that might happen, saying only that it's a matter for the board to discuss. (See JDSU Prepares Reverse Split.)

— Craig Matsumoto, Senior Editor, Light Reading

oemarket_com 12/5/2012 | 4:07:14 AM
re: JDSU Inches Toward Profits JDSU's revenue growth indicates clearly that the optical component market is recovering. However, component market is also one of the most competitive markets. Competition will also be driven up eventually. Margin will be cut lower, because there are too many small fish in the market.
Pete Baldwin 12/5/2012 | 4:07:13 AM
re: JDSU Inches Toward Profits Yep.

I was trying to get at this with a posting to a previous thread. I'll put it more directly this time:

Are optical components/modules a good business to be in at all? Sales are returning to something like a healthy level, but margins are going to be crippled for some time, yes?

There seems to be a lingering oversupply that puts the pricing power into the buyers' hands. And I don't know if it's enough to escape into higher-end components... better margins, but a smaller business.
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