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Optical components

JDSU Lands in the Black

JDSU (Nasdaq: JDSU; Toronto: JDU) stock shot up 16 percent this morning as the company announced its long-awaited return to profitability.

The company was still in the red if you go by generally accepted accounting principles (GAAP). Still, a pro forma net income of 3 cents per share was reason to celebrate after five years of losses, some of them astoundingly huge. (See JDSU Writes Off Billions More.)

Analysts had expected a pro forma profit, but of only 1 cent per share, according to Reuters Research .

JDSU shares were trading up $2.25 (15.8%) at $16.53 midday today.

The numbers got a nudge from the recent 1-for-8 reverse split of JDSU's stock, which lowered the number of shares. On yesterday's conference call with analysts JDSU chief exec Kevin Kennedy noted that without the split, JDSU would still be bobbling along at zero cents per share, technically profitable but in a very unexciting way. (See JDSU Reverse Splits.)

Optical sales shone for JDSU during the first quarter, growing 3.8 percent from the previous quarter to $138 million.

Among the product lines Kennedy name-dropped was the tunable transponder business acquired with Agility Communications. Demand there has outgrown Agility's Santa Barbara, Calif., site, so manufacturing is being spread to other facilities and to contract manufacturers. "We expect to increase capacity threefold or more by the end of fiscal 2007" for Agility's parts, Kennedy said. (See JDSU Tunes In Agility.)

Meanwhile, the test and measurement business, which was supposed to offset the low margins of optical, fell short of JDSU's expectations, Kennedy said, with revenues of $116.8 million in the quarter.

In part, that was due to the large mergers going on in the telecom space. "Industry consolidation did result in fewer large deals" in North America, Kennedy said, adding that he expects this effect to be temporary. JDSU also wrestled with lingering internal factors such as the conversion of the entire company to Oracle Corp. (Nasdaq: ORCL) databases.

Early in the call, Kennedy briefly confirmed the purchase of long-haul amplifier technology from Optovia, a startup that reportedly closed shop in September. (See JDSU Gets Optovia.) Kennedy mentioned only that JDSU had acquired certain assets and intellectual property from Optovia, and that the deal "further demonstrates JDSU's commitment to expanding its portfolio roadmap."

Optovia was not mentioned again during the call.

Metconnex , which recently sold its intellectual property to JDSU as the companies settled a patent lawsuit, got a name check when one analyst asked about reconfigurable optical add/drop multiplexers (ROADMs). Kennedy described the move as "simply protecting our intellectual property" and noted that JDSU doesn't automatically inherit any business Metconnex had, including a reported win with Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA). (See Metconnex Sells to JDSU.)

"There is no reason to believe that the way we have concluded the litigation will translate into more business for JDSU. We will have to earn that," Kennedy said.

For its second quarter, which ends in December, JDSU is predicting revenues of $332 million to $352 million, up 4 to 11 percent from the first quarter. Analysts were looking for a December forecast of $340.9 million, according to Reuters Research.

— Craig Matsumoto, Senior Editor, Light Reading

Pete Baldwin 12/5/2012 | 3:35:56 AM
re: JDSU Lands in the Black Should have added a bit of perspective to the story -- namely, that being profitable once isn't the end of the story, obviously. (cf. Redback.)

John Harmon of Needham notes: "Despite its return to profitability, JDS Uniphase remains in the midst of restructuring and site consolidation and continues to locate additional cost savings beyond prior estimates"

Still, they've got to be feeling pretty good over there today.
calipers 12/5/2012 | 3:35:52 AM
re: JDSU Lands in the Black They were in black because of Non operating income that came from the hoard of cash they have in the bank.. operating profit is another story!
sunra 12/5/2012 | 3:35:51 AM
re: JDSU Lands in the Black Still, GAAP GM of 30% versus 9% for BKHM and AVNX puts them on firmer footing than the industry segment as a whole.
fbgboy 12/5/2012 | 3:35:47 AM
re: JDSU Lands in the Black blah, blah, laywer speak...
at least they are buying product, thats all that counts to vendors...
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