JDSU Sees Stability

This morning JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU) had some refreshing news for the fiber-optic sector by announcing expected sales for its current quarter to be about $325 million. Shares of the optical components maker rose 15 percent in response to the news as investors hope that the period ending September 29, 2001, will officially mark the bottom of JDSU's business downturn (see JDSU Updates Sales Outlook).

For analysts, JDSU’s sales prediction signals that the company’s restructuring efforts are progressing well and that the company may be closer to profitability. Last week’s announcement of more write-downs was taken as another signal that JDSU is acting quickly to clean up its balance sheet (see JDSU Writes Off Billions More).

Of course, JDSU revenues numbers are nowhere near where the company thought it would be just a few short months ago. In June, JDSU predicted that it would see sales of $450 million for its first fiscal quarter of 2002 (see Sizing Up JDSU's Massive Loss), which ends Sept. 29. The company had reported sales of $601 million for its fourth fiscal quarter of 2001 (see JDSU Warns of Another Shortfall).

Wall Street was expecting JDSU to turn in sales of about $357 million for the quarter ending Sept. 29, according to Thomson Financial/First Call.

So what's there to like? The good news is that the company’s sales estimate has a ring of conviction that has long been absent from the components sector. “While forecasting continues to be difficult in the current environment, we believe our ability to predict future sales has begun to improve,” says Jozef Straus, JDSU’s president and CEO, according to a press release issued by the company.

Analysts also see JDSU’s layoff totals as an encouraging sign that the company can return to profitability. The company said today that it has been cutting jobs at a faster rate than previously anticipated. Specifically, the company has gone from 29,000 employees earlier this year to less than 14,000 – a level it didn’t expect to reach until sometime this winter.

The company will announce the details of its first quarter on October 25, 2001.

Just after noon on Monday, JDSU shares had climbed $0.81 (15%) to $6.17, on below average volume.

- Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com