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Analyst Blog

Yesterday, after the closing bell, JDS Uniphase Corp. (JDSU - Analyst Report) declared mixed financial results for the first quarter of fiscal 2014. While net income met the Zacks Consensus Estimate, total revenue surpassed the same. However, management provided a disappointing revenue outlook for the ensuing second quarter of fiscal 2014. As a result, in the aftermarket trade on Nasdaq, the stock price of JDS Uniphase was down by $1.17 (7.93%) to $13.58.

Quarterly net revenues were $429 million, up 1.9% year over year and also above the Zacks Consensus Estimate of $424 million. On a GAAP basis, quarterly net income from continuing operations was $0.3 million or a breakeven per share compared with a net loss of $9.8 million or 4 cents per share in the year-ago quarter. However, quarterly adjusted earnings per share of 7 cents were exactly in line with the Zacks Consensus Estimate.

Adjusted gross margin, in the reported quarter, was 46.3% compared with 45.8% in the year-ago quarter. Operating expenses were $178.6 million, up 3.5% year over year. Adjusted operating margin was 8.3% compared with 9.2% in the year-ago quarter. Quarterly adjusted EBITDA was $53.2 million as against $55.6 million in the year-ago quarter. Overall book-to-bill ratio was below 1.0.

JDS Uniphase generated $29.5 million of cash from operations in the reported quarter. At the end of the first quarter of fiscal 2014, JDS Uniphase had $1,057.1 million of cash & marketable securities and $518.2 million of outstanding debt on its balance sheet compared with $486.2 million of cash & marketable securities and no outstanding debt at the end of fiscal 2013. The debt-to-capitalization ratio was 0.30 at the end of the reported quarter. 

Revenue Segments

In the first quarter of fiscal 2014, the Network and Service Enablement segment accounted for $171.9 million of revenues, up 1.4% year over year. The Communications and Commercial Optical Products segment generated $204.6 million, up 5% year over year. Within this segment, Optical Communications revenues were $176.2 million, up 8.1% year over year and Commercial Lasers business revenues were $28.4 million, down 11% year over year. The Optical Security and Performance segment generated the remaining $52.5 million revenues, down 7.1% year over year.

Geographic Segments

In the first quarter of fiscal 2014, the Americas segment accounted for 46.4% of the total revenue, the EMEA segment generated 24.3% and the remaining 29.3% came from the Asia-Pacific region.

Future Financial Outlook

For the second quarter of fiscal 2014, management expects the company’s revenues to be within the range of $420–$440 million. Its mid-point of $430 million is significantly below the current Zacks Consensus Estimate of $459 million.

Other Stocks to Consider

JDS Uniphase currently has a Zacks Rank #3 (Hold). Other stocks in the Communications Component manufacturing industry that are performing well include EXFO Inc. (EXFO - Snapshot Report), ClearOne Inc. (CLRO - Snapshot Report) and Envivio Inc. (ENVI). While EXFO currently carries a Zacks Rank #1 (Strong Buy), both ClearOne and Envivio have a Zacks Rank #2 (Buy).

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