JDSU Cuts Goodwill
The amount could be "up to the Company's total goodwill balance of $744 million," the filing states. We'll find out when JDSU reports earnings Feb. 5.
Goodwill represents how much a company overspent for its acquisitions, when measured by current standards. When the economy collapses, goodwill gets erased.
That erasure is a noncash charge and doesn't directly affect the company's health. But it does mean losses. Analysts polled by Reuters Research expected JDSU to report net losses of about $7 million, or 3 cents pre diluted share, as measured by generally accepted accounting principles (GAAP). That's now going to measure... well, a lot more.
In a sense, it's small potatoes. Light Reading's readers will recall JDSU's goodwill writedown of $38.7 billion in mid-2001 (the SDL era), which led to a single-quarter on-paper loss of $50.6 billion. (See Sizing Up JDSU's Massive Loss.) And it wasn't enough. (See JDSU Writes Off Billions More.)
Should JDSU's finance department reduce goodwill to zero, they'll avoid those kinds of surprises.
JDSU hasn't had any big buys lately, so the bulk of the goodwill in question probably goes back to 2005 and the $760 million purchase of Acterna. There's probably a bit of Picolight in there, too, since that was a $115 million deal, most of it in stock. (See JDSU Buys Into Testy Market and JDSU Picks Up Picolight for $115M.)
JDSU's stock was unchanged in after-hours trading.
— Craig Matsumoto, West Coast Editor, Light Reading