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Yesterday, after the closing bell, JDS Uniphase Corp. (JDSU - Analyst Report) declared mixed financial results for the third quarter of fiscal 2014. While the bottom line surpassed the Zacks Consensus Estimate, the top line significantly fell below the same.

Moreover, management provided a tepid outlook for the ensuing fourth quarter of fiscal 2014. As a result, in the aftermarket trade on Nasdaq, the stock price of JDS Uniphase was down by 76 cents (6%) to $11.91.  

Quarterly net revenue came in at $418 million, up 3.1% year over year. However, net revenue lagged significantly to the Zacks Consensus Estimate of $432 million.

On a GAAP basis, quarterly net loss from continuing operations was $1.5 million or 1 cent per share compared with a net loss of $28 million or 12 cents per share in the year-ago quarter. However, quarterly adjusted earnings per share of 6 cents outpaced the Zacks Consensus Estimate of 4 cents.

Adjusted gross margin, in the reported quarter, stood at 47.6% compared with 45.9% in the year-ago quarter. Operating expenses were $196.3 million, up 11.2% year over year. Adjusted operating margin was 6.5% compared with 6.8% in the year-ago quarter. Quarterly adjusted EBITDA was $45.4 million as against $44.6 million in the year-ago quarter.

JDS Uniphase generated $42.5 million of cash from operations in the quarter under review. At the end of the third quarter of fiscal 2014, JDS Uniphase had $894.8 million of cash & marketable securities and $530.2 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 third quarter of fiscal 2014, the Network and Service Enablement segment generated $172.3 million in revenues, down 1.1% year over year. The Communications and Commercial Optical Products segment recorded $194.6 million revenues, up 8.6% year over year. Within this segment, Optical Communications revenues came in at $163.7 million, up 7.1% year over year and Commercial Lasers business revenues stood at $30.9 million, up 17.5% year over year. The Optical Security and Performance segment generated the remaining $51.1 million revenues, down 1.5% year over year.

Geographic Segments

In the third quarter of fiscal 2014, the Americas segment accounted for 47% of the total revenue, the EMEA segment generated 24.5% and the remaining 28.5% was contributed by the Asia-Pacific region.

Future Financial Outlook

For the fourth quarter of fiscal 2014, management expects the company’s revenues to be within the range of $425–$445 million and non-GAAP earnings per share will be 10–14 cents excluding stock-based compensation expenses.

Other Stocks to Consider

JDS Uniphase currently has a Zacks Rank #3 (Hold). Other better-ranked stocks in the Communications Component manufacturing industry include Harmonic Inc. (HLIT - Snapshot Report), Premiere Global Services Inc. (PGI - Snapshot Report) and SeaChange International Inc. (SEAC). All these stocks currently have a Zacks Rank #2 (Buy).  

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