JDSU has officially split into two companies, and Viavi, the new company that will retain JDSU's network test and service assurance business, is emerging from the split with plans to expand its customer base and focus on software rather than its traditional hardware instruments.
The break-up of JDSU, first announced in September of last year, was officially complete over the weekend with Viavi trading commencing Tuesday. (See JDSU to Complete Split Aug. 1, JDSU Unveils New Company Names and JDSU to Split in Two.)
According to Tom Waechter, former JDSU and new Viavi CEO, the break-up was four years in the making, as the company worked to prune its older product lines, focus on innovation and improve its financials to the point where it could break in two. It's a move he says will simplify things for the analysts and investors that follow the company, although some believe future M&A might also be in either new company's plans. (See JDSU Spin-Offs Look M&A-Ready.)
"Splitting gives us a cleaner investment vehicle and lets us be more agile with customers and the markets," Waechter says. "We don't have to move three businesses in unison or prioritize across the three businesses as we did with JDSU."
On the service assurance front, most of JDSU's revenues came from broadband and mobile service providers using its test and measurement instruments. Waechter says that through its (several) acquisitions and internal development, the new Viavi will have a more complete end-to-end platform with more emphasis on software. This, he says, aligns well with network operators' move to SDN and NFV. (See JDSU on NFV/SDN: What's Next?, JDSU Buys More 4G SPIT Smarts and JDSU Acquires Arieso for $85M.)
"[Operators] are asking for more virtualization of the instruments," he adds. "They want technicians to use their smartphones to tie remotely into instruments in the cloud and use our expertise that way. Operators at the forefront of moving to SDN want a more solutions-based platform."
Viavi wants to look beyond network operators to enterprise and data center customers, where Waechter sees higher growth. Its 2013 acquisition of Network Instruments has provided it with the sales channel to approach these new customers, he says. (See JDSU Acquires Network Instruments.)
With all of these customers, a primary focus for Viavi will be collecting, analyzing and monetizing all the data that is flowing across their networks for both network optimization and customer care. Sue Rudd, director, service provider analysis at Strategy Analytics Inc. , says this -- the integration of network and traffic performance with user-impacting customer experience monitoring to achieve service assurance -- is a hot area right now. (See JDSU: Delivering Dynamic Networks for a Personalized Experience and Few in Number, Big in Data.)
"Viavi will have real strength in providing lower-layer network traffic data and analytics for its own end-to-end solutions," Rudd writes in an email to Light Reading. "In addition, these inputs should integrate easily as inputs for a variety of third-party upper-layer end-to-end service assurance and customer experience management (CEM) partners."
Viavi is certainly not the only vendor looking to help service providers make sense of their data and test their networks. As with JDSU, it will come up against other big names like Ixia (Nasdaq: XXIA), Spirent Communications plc , NetScout Systems Inc. (Nasdaq: NTCT) and others in this service provider IT space. Waechter says Viavi's move to virtualization will be what sets it apart. (See 10 SPIT Vendors to Watch in 2015.)
"It's more difficult for some competitors to do that, especially smaller ones," he says of virtualizing testing tools. "If they are a hardware instruments company, to really develop that software capability or acquire it is a challenge. It has helped us differentiate."
JDSU may have split in two, but Viavi is still really two companies in one. In addition to its test and measurement business, Viavi also focuses on anti-counterfeiting for bank notes, which Waechter said will get more attention at Viavi than it did previously. JDSU's optical components and laser business will now operate under the name Lumentum, which also starts trading this month. (See Let There Be Lumentum! JDSU Names Its New Empire.)
— Sarah Thomas, , Editorial Operations Director, Light Reading