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JDSU Preps Fab Sales

JDSU (Nasdaq: JDSU; Toronto: JDU) appears to be on the verge of selling its manufacturing facility in Shenzhen, China, and it's possible the former Picolight fab in Colorado is on the block, too, Light Reading has learned.

Both moves would apparently be part of a streamlining that former CEO Kevin Kennedy announced during an earnings call in November. Kennedy upstaged the news minutes later by rebranding himself as outgoing CEO. (See Kennedy Bids JDSU Adieu and JDSU's Kennedy Lands at Avaya.)

JDSU has 19 sites and wants to get down to 12, partly by unloading some manufacturing facilities, Kennedy said at the time. He also announced layoffs of 400, which according to some sources were carried out in recent weeks.

JDSU declined to comment on the Shenzhen and Picolight rumors, though.

Rumors about the sale of the Shenzhen fab began spreading last month, with the presumed buyer being contract manufacturer Fabrinet Co. Ltd. (NYSE:FN) (See JDSU: Selling Out?) That deal is now on the verge of closing, sources told Light Reading last week.

Details on a potential Picolight deal are more vague. Some sources think the fab's Vertical Cavity Surface Emitting Lasers (VCSELs) production is being moved into one of JDSU's Bay Area facilities -- implying JDSU would continue selling the devices.

Picolight's lasers go into low-speed datacom transceivers, and that happens to be a business JDSU wants to exit. In November, Kenedy had said the company will focus on 8- and 10-Gbit/s transceivers instead.

— Craig Matsumoto, West Coast Editor, Light Reading

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^Eagle^ 12/5/2012 | 4:12:47 PM
re: JDSU Preps Fab Sales I think JDSU still has a fairly expensive operation in Santa Barbara. Small team left, but high overhead EPI/FAB due to Santa Barbara cost of living. I am not 100% sure, but I think I recall someone saying they still make the tunable lasers down there after a failed try to move the process to Silicon Valley JDSU site. Lightreading, it might be interesting for a short story detailing the or outlining the work that JDSU does at the 19 sites. where are their EPI or FAB's? Where is it only simple assembly of modules? etc. It would give us curious minds a nice insight into the magnitude of the problem at JDSU.

Sailboat
HomerJ 12/5/2012 | 4:12:45 PM
re: JDSU Preps Fab Sales Didn't picolight also make 10Gb/s VCSELs?
Vent 12/5/2012 | 4:12:45 PM
re: JDSU Preps Fab Sales It would also be interesting if the same thing
waht where could be done for the Avanex-Bookham tie up.

agility1 12/5/2012 | 4:12:44 PM
re: JDSU Preps Fab Sales reliable word on the street is that jdsu's santa barbara location does not include a fab (or mocvd), that's all been successfully transfered north....

I doubt that the writedowns will include the Agility acquisition, as that biz is said to be very strong...
Steve0616 12/5/2012 | 4:12:44 PM
re: JDSU Preps Fab Sales when was the last time JDSU did anything that made much sense?
^Eagle^ 12/5/2012 | 4:12:44 PM
re: JDSU Preps Fab Sales HomerJ,

I do believe you are right. I think maybe that was even the "big" reason JDSU paid so much for Picolight.. that their VCSEL was 10G ready and it was going to bring all this new business to JDSU. hmmmmm... makes one wonder about the announced "goodwill" write down. Should they right down more if the IP turned out to not work at 10G?

curious minds would like to know more.

sailboat
rahat.hussain 12/5/2012 | 4:12:44 PM
re: JDSU Preps Fab Sales this was too much to pass up - let's see:

agility1 writes:

"I doubt that the writedowns will include the Agility acquisition, as that biz is said to be very strong..."

what's next?

picolight1 writes: "Picolight's 10Gb VCSEL was Telcordia tested, reliable, and was shipping in volume, so I doubt that the writedowns will include the Picolight acquisition, as that biz is said to be very strong..."?

odo1 <-- who believes that jdsu should have acquired odo since odo's biz is said to be very strong
Riverhigh 12/5/2012 | 4:12:43 PM
re: JDSU Preps Fab Sales It was only recent that JDSU and analysts alike were touting the virtues of vertical integration (purcahse of Picolight). Once again they appear to be going in the opposite direction. Not a cofidence builder from an investors perspective. Any thoughts of what went wrong and why this apparent change in direction?
^Eagle^ 12/5/2012 | 4:12:42 PM
re: JDSU Preps Fab Sales Riverhigh,

what went wrong? Poor due diligence. Believing hype and marketing slides instead of doing the real hard technical evaluations. Not checking with customers (oh I am sure they were given "customer references"... from the "Friends" of the acquired company who were buying some parts. But they never checked with the customer who were NOT buying the products to see why not.

Also insider deals with VC and old pal connections (The "good 'ole boy network) many of these deals do a great job of showing why insider deals are many times full of baloney.

Finally, LACK of Patience and Lack of vision and Lack of leadership, (not at CEO level.. I would lay these deals at the feet of the management team surrounding the CEO. I would blame the CEO for picking those guys, but the CEO himself relied on advice given from many others in his inner circle.

most of the buyouts they did were poorly vetted and they paid way too much for the acquisitions.

sailboat
^Eagle^ 12/5/2012 | 4:12:42 PM
re: JDSU Preps Fab Sales Riverhigh,

what went wrong? Poor due diligence. Believing hype and marketing slides instead of doing the real hard technical evaluations. Not checking with customers (oh I am sure they were given "customer references"... from the "Friends" of the acquired company who were buying some parts. But they never checked with the customer who were NOT buying the products to see why not.

Also insider deals with VC and old pal connections (The "good 'ole boy network) many of these deals do a great job of showing why insider deals are many times full of baloney.

Finally, LACK of Patience and Lack of vision and Lack of leadership, (not at CEO level.. I would lay these deals at the feet of the management team surrounding the CEO. I would blame the CEO for picking those guys, but the CEO himself relied on advice given from many others in his inner circle.

most of the buyouts they did were poorly vetted and they paid way too much for the acquisitions.

sailboat
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