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Analyst Blog

Yesterday, after market close, JDS Uniphase Corp. (JDSU - Analyst Report) declared strong financial results for the second quarter of fiscal 2012. The company, which manufactures broadband and optical networking components for the telecom industry, generated solid top and bottom-line growth. As a result, in the after market trade on NASDAQ, stock price of JDS Uniphase was up by 80 cents (6.09%) to $13.93.

Optical Networking component sector is highly competitive. The company competes fiercely with several players, such as Finisar Corp. (FNSR - Snapshot Report), Oplink Communications Inc. (OPLK - Snapshot Report), Opnext Inc. , and Oclaro Inc. (OCLR - Snapshot Report), to name a few. Despite competition, JDS Uniphase’s differentiated products gained market traction.

Though quarterly net revenue was $412.8 million, down 12.8% year over year, it surpassed the Zacks Consensus Estimate of $391 million. On a GAAP basis, quarterly net loss was $10.2 million or 4 cents per share compared with a net income of $23.6 million or 10 cents per share in the year-ago quarter. However, quarterly adjusted (excluding special items) EPS was 6 cents, easily beating the Zacks Consensus Estimate of 4 cents.

Gross margin in the reported quarter was 42.4% compared with 45.2% in the year-ago quarter. In the second quarter, operating expenses were $176.6 million, down 2% from the prior-year quarter. However, quarterly operating loss was $1.6 million compared with an operating income of $33.6 million in the prior-year quarter.  Total segment operating income in the previous quarter was $39.5 million compared with $73.1 million in the prior-year quarter.

At the end of the second quarter of fiscal 2012, JDS Uniphase had $722.6 million of cash & marketable securities and $295.7 million of outstanding debt on its balance sheet compared with $695.7 million of cash & marketable securities and $285.8 million of outstanding debt on its balance sheet at the end of fiscal 2011. At the end of the reported quarter, debt-to-capitalization ratio was 0.22 compared with 0.21 at the end of fiscal 2011. JDS Uniphase generated $45 million of cash from operations in the second quarter of fiscal 2012.

Revenue Segments

In the second quarter of fiscal 2012, Communications Test and Measurement segment accounted for $196.2 million of revenue, down 15.2% year over year. Communications and Commercial Optical Products segment generated $180.3 million, up 7.3% year over year. Within this segment, Optical Communications revenue was $138.1 million, down 18% from the prior-year quarter and Commercial Lasers business revenue was $25.1 million, up 10.6% from the prior-year quarter. Advanced Optical Technologies segment generated the remaining $53.7 million revenue, down 1.8% year over year.

Geographic Segments

In the second quarter of fiscal 2012, the Americas segment accounted for 51% of total revenue, the EMEA segment was 24%, and the rest 25% was generated from the Asia-Pacific region.

Future Financial Outlook

For the third quarter of fiscal 2012, management expects the company’s non-GAAP revenue to be within the range of $410 million - $425 million.

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