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JDS Uniphase Corp., formed by the merger of Uniphase and JDS Fitel on 6/30/99, is an optoelectronics company that manufactures fiberoptic telecommunications quipment. The company designs, develops, manufactures and distributes a comprehensive range of fiberoptic communications products. These products are deployed by system manufacturers to develop optical networks for the telecommunications and cable television industries.
JDSU in the December period, revenues probably declined about 5% sequentially, but on a year-over-year basis our estimate represents more than a 20% advance.The company will record a similar comparison for the full fiscal 2005. Although margins remain under pressure, some improvement should be reflected in this year’s bottom line.
The company continues to work on restoring profitability. Last fiscal year, it completed its restructuring program, which was implemented as the result of the downturn in the telecom industry. But the company plans on making further efforts, including personnel reductions, factory consolidation, shifting production to its lower-cost facility, and increasing the use of outsourcing. Management hopes to derive over 50% of its communications cost of goods sold from its factory in Shenzhen by the end of this fiscal year and to ultimately increase that to 80%-85%. These changes should help JDSU reach its long-term goal of achieving 40% gross margins (including depreciation expense). There are also opportunities to increase sales. The company plans to make more acquisitions. (It recently purchased. Advanced Digital Optics to extend its high-definition display business and E2O, a developer and manufacturer of optical transceivers). JDS Uniphase should also benefit from such market trends as the shift to more-advanced television sets. Microdisplay rear projection TVs require optical engines to project the high-definition images, and JDSU produces light engines for large-screen rear-projection television. For the year ahead, on the other hand, JDSU shares are ranked to lag the broader market. Risk-averse investor should also note that this stock carries a below average safty.
-------------------- Disclaim: I don’t guarantee the accuracy of the information I post. All my posts are based on my own research. I am not a registered investment advisor and therefore I am not qualified to give you any investment advices. You Make Your Decision! Posts: 389 | Registered: Mar 2005
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