Test Group Buoys JDSU

Optical components continue to see slow sales for JDSU (Nasdaq: JDSU; Toronto: JDU), but an uptick in test and measurement business kept fourth-quarter revenues on track with expectations.

Dampened expectations, that is. Three months ago, analysts were expecting fourth-quarter revenues to hit $290 million, but JDSU slammed that door shut. (See JDSU's Forecast Disappoints.)

Revenues for the fourth quarter, which ended June 27, came in at $276.1 million.

Table 1: JDSU's Q4

	4Q08	4Q09
Revenues ($M)	390.3	276.1
Net Income ($M)	-29.8	-59.5
EPS ($)	-0.13	-0.28
Share Price ($)	11.90	5.79
Source: Thomson Reuters, JDSU

JDSU's non-GAAP losses of 1 cent per share beat analyst estimates by a penny.

Table 2: JDSU vs. Analysts

Analysts' Consensus Estimate, 2Q09	Actual 2Q09
278.6	277.0
-0.02	-0.01
-3.6	-2.3
Source: Thomson Reuters, JDSU

No division did well compared with last year's pre-recession numbers, but the test division managed to increase revenues by 5 percent compared with the third quarter, coming in at $135.5 million.

For the Communications and Commercial Optical Products division, which includes telecom optical components and subsystems, revenues fell 11 percent compared with the previous quarter, to $90.7 million.

Sales actually increased at nine of JDSU's top 15 optical customers, but that got offset by one vendor that's still burning off its excess inventory, officials said on today's earnings call. That vendor is buying JDSU parts for reconfigurable optical add-drop multiplexers (ROADMs), which represented less than 25 percent of JDSU's total optical revenues.

Overall, JDSU continues its latest phase of cost-cutting. A slimming-down that will reduce the number of sites to 12, from 19, should be completed during the current quarter, which ends Oct. 3, officials said. The company is also continuing the process of reducing its manufacturing, relying more on contract manufacturers. (See JDSU Preps Fab Sales, JDSU Selling Shenzhen Facility, and JDSU to Close Picolight Fab.)

JDSU gave a relatively cheery forecast for its first quarter, which ends Oct. 3, saying revenues will be between $283 million and $300 million. Analysts polled by Thomson Reuters were expecting $288 million.

— Craig Matsumoto, West Coast Editor, Light Reading