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Test & Measurement

JDSU's Setback

3:20 PM -- JDSU is down $2.36 (16.5%) at $11.95 after last night's earnings, apparently on a weak forecast for the June quarter.

The company gave out a forecast range of $381 million and $403 million in revenues during its earnings call yesterday, but Thomson Financial says analysts were expecting $405 million. (See JDSU Posts Q3.)

That's worrisome by itself, but it's even more concerning that the test and measurement division is to blame.

That's the part of the business that's supposed to shore up margins while optical slowly climbs back to health. Yes, JDSU rules optical -- the link above has CEO Kevin Kennedy mentioning a doubling of capacity for reconfigurable optical add-drop multiplexers (ROADMs) -- but a full comeback has to rely on test, where the "winner" doesn't have to settle for bread-crumb margins.

It's got to have been a frustrating run for CEO Kevin Kennedy. Like a parent with triplets, JDSU has had trouble getting all three of its moving parts -- optical; test and measurement; and the commercial division that I like to call "paint" -- to be happy at the same time, although it does happen occasionally. (See JDSU Surges After Q2 and JDSU Sees Optical Rebound.)

What's it going to take to get the turnaround finished? Optical has a role there, but JDSU has to keep banking on that test business and hope this latest setback doesn't grow into something bigger.

— Craig Matsumoto, West Coast Editor, Light Reading

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