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JDSU's Forecast Disappoints

Craig Matsumoto
4/29/2009

If there's an increase in optical components sales coming soon, it doesn't look like JDSU (Nasdaq: JDSU; Toronto: JDU) will lead the way.

In reporting earnings for its third quarter, which ended March 28, JDSU produced a disappointing forecast for fourth-quarter revenues: $265 million to $285 million, compared with Wall Street estimates of $290.5 million. (See JDSU Posts Q3.)

That forecast does leave room for revenue growth -- just not very much room.

Table 1: JDSU Earnings Snapshot

Q308 Q309 Change (%)
Revenues ($M) 383.9 280.6 -27%
Net Income ($M) -31.2 -85.2 -173%
EPS ($) -0.13 -0.40 -208%
Share Price ($) 14.31 5.57 -61%
Source: Thomson Reuters, JDS Uniphase




Meanwhile, JDSU's third-quarter numbers were almost exactly on par with analyst expectations.

Table 2: JDSU vs. Analysts
Analysts' Consensus Estimate Q309 Actual Q309
Revenues ($M) 284.8 280.6
Net Income, non-GAAP ($M) -6.6 -6.9
EPS, non-GAAP ($) -0.03 -0.03




JDSU shares were down 67 cents (12%) at $4.90 in early after-hours trading.

Analysts had theorized that the recession had stifled orders to the point where inventories were drying up, leading to a possible sales boost for the components companies -- not enough to end the downturn, but enough to get happy about. (See Coming Soon: An Optical Uptick?)

It's hard to specify what JDSU's forecast means for optical revenues, given that the company makes much of its money in other markets, such as test and measurement.

JDSU might not have triggered a party with its forecast, but the company says business is improving, at least.

"We did see an increase in demand over the last two months," CEO Thomas Waechter said in the opening minutes of today's earnings call.

Oclaro Inc. (Nasdaq: OCLR) -- the newly born tag team of Bookham and Avanex -- is predicting what could be increased sales in the June quarter, but it's hard to tell because Avanex's March-quarter revenues aren't being disclosed. (See Oclaro's Numbers and More Oclaro Numbers.)

JDSU's GAAP results include the loss of $45 million in goodwill, leaving just $11.1 million in goodwill on JDSU's balance sheet. At the end of its second quarter, JDSU wiped out most of its $744 million in goodwill, likely a concession that its acquisitions -- Acterna in particular -- have lost much of their value in the recession. (See JDSU Cuts Goodwill and JDSU Buys Into Testy Market.)

— Craig Matsumoto, West Coast Editor, Light Reading

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Pete Baldwin
Pete Baldwin
12/5/2012 | 4:05:50 PM
re: JDSU's Forecast Disappoints


Extra sound bite from Waechter, post-deadline:


"For the forecast that we've shown for fiscal Q4 we see test and mesurement rebounding a little bit better than the optical comms business"


and, from CFO David Vellequette :



"Test and measurement is usually more stable compared with the optical comms business in the June quarter because the budgets have rolled out" - so softness in Q4 is more optical than test.

menexis
menexis
12/5/2012 | 4:05:49 PM
re: JDSU's Forecast Disappoints
Yeah with these numbers they will definitely not be leading the way.
Pete Baldwin
Pete Baldwin
12/5/2012 | 4:05:46 PM
re: JDSU's Forecast Disappoints


True.  Or, the uptick hasn't really started yet.


*Or* -- the uptick is on, but carrier forecasts and, subsequently, component guys' forecasts, are so conservative that it's masking the results.  Because no one wants to say, "Guys! Business is back!" and then be wrong.  (That's just a stray thought on my part; i doubt this is what's happening.)


Anyway, to circle back: Based on the comment i'd first posted, it seems pretty clear JDSU doesn't expect much of an optical rebound this quarter.

Balet
Balet
12/5/2012 | 4:03:13 PM
re: JDSU's Forecast Disappoints
Hard times for everyone nowadays. I still believe JDSU needs fresh blood, cutting that slowing overhead and keeping focused on markets and technology, not on their "greatness". Moving everything overseas is not an answer either.
It is not even prestigious to work for JDSU any more. Finisar or even BKHM/AVNX are much more flexible and fun.
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