Shenzhen Strike Slaps JDSU
Employees are reportedly on strike in response to JDSU selling its plant and their jobs to Sanmina-SCI
Workers at the JDSU (Nasdaq: JDSU; Toronto: JDU) manufacturing facility in Shenzhen, China, have reportedly gone on strike in response to their workplace being sold to Sanmina Corp. (Nasdaq: SANM).
Word of the strike began circulating around the optical components industry late last week. Details are spotty, but a report published this morning by analyst John Harmon of Needham & Co. says the strike is apparently about "demand for compensation for the planned transfer" to Sanmina-SCI.
Earlier this month, JDSU agreed to sell its Shenzhen facility, and the 2,000 employees there, to Sanmina-SCI, which would then become a JDSU contract manufacturer. The deal is expected to close by April 6. (See JDSU Selling Shenzhen Facility.)
In a report published this morning, Harmon cites "numerous sources" that say JDSU's Shenzhen workers went on strike sometime around Feb. 5, the day of the announcement.
JDSU released a statement today that doesn't mention the word "strike" but says the company is "aware of employee issues" in Shenzhen that resulted from the Sanmina-SCI announcement. The statement says JDSU "is actively engaged and working with Shenzhen employees" and with Chinese government entities including the Chinese Free Trade Zone Administration and the Labor Bureau.
By Harmon's estimates, about half of JDSU's optical components revenues come through Shenzhen. So, to account for lowered production that the strike could cause, Harmon is taking his forecasts down a notch for JDSU, figuring revenues for fiscal 2009, which ends in June, will be about $1.3 billion rather than $1.32 billion.
Harmon is also lowering fiscal 2010 revenue projections to $1.35 billion from $1.4 billion. He's keeping a Hold rating on the stock.
Optical communications, including some non-telecom lasers, represented 36 percent of JDSU's revenues in the most recent quarter. (See JDSU Reports Q2.)
— Craig Matsumoto, West Coast Editor, Light Reading
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