Trimming Continues at JDSU

That nipping and tucking feeling is back at JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU), as the company announced its latest round of consolidation yesterday.

Two JDSU sites -- in Ewing and Mountain Lakes, N.J. -- are being transferred to Fabrinet Co. Ltd., a Thailand-based contract manufacturer that builds some of JDSU's parts. Manufacturing previously handled by the New Jersey sites and by JDSU's Melbourne, Fla., facility will be handed over to Shenzhen, China, which is becoming the hub of JDSU's telecom manufacturing. Separately, JDSU will phase out some of the display products being manufactured in Santa Rosa, Calif.

All told, 850 jobs will be cut, 150 of them in support positions, according to JDSU's release. The Fabrinet transfers are expected to be done before June 30, while the other changes will take until December (see JDSU to Cut 850).

JDSU will retain its R&D operations at the Ewing and Melbourne sites, but the Mountain Lakes site will be given entirely to Fabrinet, a spokesman says.

CEO Kevin Kennedy had hinted at more cuts to come when JDSU reported earnings in January (see JDSU's Q2 Points Downhill). At an analyst day in February, JDSU officials gave specifics, saying they hoped to reduce the number of manufacturing sites to about 10 from a peak of 34, paring the facilities accumulated in the company's frenzy of acquisitions in the years before the 2001 crash.

JDSU's remaining North America manufacturing sites are in Ottawa and Santa Rosa and San Jose, Calif.

While China has a lower cost base than North America, due in part to lower salaries, the transfer of operations to Asia can be pricey in the short run. JDSU competitor Bookham Inc. (Nasdaq: BKHM; London: BHM) is moving manufacturing to China, but the process is helping to deepen Bookham's losses for now (see Bookham Still Bleeding ).

In November, Fabrinet purchased JDSU's Singapore and Indonesia facilities, both of which were making optical transceivers (see JDSU Sells Manufacturing Operations). JDSU works with one other contract manufacturer: Venture Corp. Ltd., also based in Thailand.

— Craig Matsumoto, Senior Editor, Light Reading