JDSU Regresses in Q3
The results show JDSU -- and really, the whole optical components industry -- isn't out of the woods yet. Big mergers among equipment companies, such as the one creating Alcatel-Lucent (NYSE: ALU), are partly to blame, but JDSU found plenty of other reasons why its largest optical customers reduced orders last quarter.
"Two of our top eight [customers], for example, were executing lean-manufacturing initiatives, an additional four of our top eight customers were involved in targeted inventory management actions, and separately, five of our most significant customers were involved in consolidation activities," JDSU chief executive Kevin Kennedy said on a call with analysts yesterday.
For its third quarter, which ended March 31, JDSU reported losses of $14.2 million, or 7 cents per share, on revenues of $361.7 million, compared with profits of $23.2 million, or 10 cents per share, on revenues of $366.3 million the previous quarter. (See JDSU Reports Q3.)
For its third quarter a year ago, JDSU reported net income of $3.7 million, or 2 cents per share, on revenues of $314.9 million.
Non-GAAP earnings did alright, reaching 13 cents per share, compared with analysts' estimates of 9 cents.
JDSU shares were down $2.22 (13.3%) at $14.42 in late-morning trading today.
JDSU's book-to-bill ratio for optical components was "considerably less than 1," in the third quarter, Kennedy said, noting that it's become clear that customers' inventories got bloated late in 2006. That led to a fourth-quarter forecast of $325 million to $345 million in sales, compared with the $346.6 million analysts were expecting, according to Reuters Research .
Overall, JDSU's optical communications revenues were down 3 percent from the previous quarter, at $128.7 million. A particularly weak point was in DWDM long-haul sales, which saw their first decline in "many quarters," Kennedy said.
In response, JDSU plans staff cuts of 400, mostly in optical components manufacturing in China and North America. The cuts, to be a combination of attrition and layoffs, will continue until year's end. JDSU employed 6,834 as of March 31.
Optical wasn't the only source of woes for JDSU. The test-and-measurement business was down 3 percent from the previous quarter, at $162.9 million.
— Craig Matsumoto, West Coast Editor, Light Reading
Interested in learning more on this topic? Then come to The Future of Optical: Europe, a conference that will explore today's optical networking infrastructure, markets, and technology in depth. To be staged in London, on May 15, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.