Oops! JDSU Writes Off Again
According to a filing JDSU made this week with the SEC, as of March 31, 2002, JDSU held some 24.7 million Nortel shares with a fair value of $110.9 million. When Nortel said it was acquiring JDSU's plant, the approximately 65.7 million common shares Nortel planned to issue in the deal were valued at $2.5 billion (see Nortel Buys JDSU Plant for $2.5B).
JDSU, which has already written off some of this staggering loss, is now writing off another chunk of the losses on the Nortel stock. For the nine months ended March 31, 2002, JDSU recorded a writedown of $114.4 million for an "other-than-temporary decline in fair value of [its] investments."
In September 2001, JDSU reclassified some $512 million worth of Nortel shares it held from the Zurich plant purchase as a "realized loss." The investment counted as a one-time charge against JDSU's earnings (see JDSU Writes Off Billions More).
As of February 1, 2001, Nortel's shares traded at $38.27. Since May 3, 2002, the company's stock has traded below $3.
When JDSU agreed to sell the Zurich facility, Nortel also committed to accept a certain level of component supplies from JDSU. If it could not take that supply, the company was required to pay JDSU $500 million by December 31, 2003.
Elsewhere in JDSU's filing, the company revealed that during the nine-month period ended March 31, it had taken a $13.9 million writedown related to its 29 percent stake in ADVA AG Optical Networking (Frankfurt: ADV).
— Phil Harvey, Senior Editor, Light Reading