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Analyst Blog

Yesterday, after market close, JDS Uniphase Corp. (JDSU - Analyst Report) declared solid financial results for the fourth quarter of fiscal 2012. Both the company’s top- and bottom-line beats the Zacks Consensus Estimates.

Its Optical Networking component sector is highly competitive, with several players such as Finisar Corp. (FNSR - Snapshot Report), Oplink Communications Inc. (OPLK - Snapshot Report), and Oclaro Inc. (OCLR - Snapshot Report), to name a few. Despite competitive threats and macro-economic headwinds, JDS Uniphase’s performance in the quarter was quite commendable.  

Quarterly net revenue was $439.3 million, down 7% year over year but surpassed the Zacks Consensus Estimate of $423 million. On a GAAP basis, quarterly net loss was $24.3 million or a loss of 10 cents per share compared with a net income of $9.3 million or 4 cents per share in the year-ago quarter. However, quarterly adjusted (excluding special items) earnings per share were 10 cents, a penny above the Zacks Consensus Estimate.

Adjusted gross margin in the reported quarter was 45% compared with 46.7% in the year-ago quarter. In the fourth quarter, operating expenses were $207.9 million, up 12% from the prior-year quarter. Quarterly adjusted operating margin was 8.7% compared with 12.3% in the year-ago quarter. Total segment operating income in the previous quarter was $38.2 million compared with $58.2 million in the prior-year quarter.

At the end of fiscal 2012, JDS Uniphase had $722.5 million of cash & marketable securities and $445.5 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.

Debt-to-capitalization ratio at the end of fiscal 2012 was 0.13, compared with 0.21 at the end of fiscal 2011. JDS Uniphase generated $38 million of cash from operations in the previous quarter.

Revenue Segments

In the fourth quarter of fiscal 2012, Communications Test and Measurement segment accounted for $196.2 million of revenue, down 7.1% year over year. Communications and Commercial Optical Products segment generated $185 million, down 8.6% year over year.

Within this segment, Optical Communications revenue was $155.4 million, down 10.9% from the prior-year quarter and Commercial Lasers business revenue was $29.6 million, up 6.5% from the prior-year quarter. Advanced Optical Technologies segment generated the remaining $58.1 million revenue, consistent with the year over year number.

Geographic Segments

In the fourth quarter of fiscal 2012, the Americas segment accounted for 54% of total revenue, the EMEA segment generated 22%, and the remaining 24% came from the Asia-Pacific region.

Future Financial Outlook

For the first quarter of fiscal 2013, management expects the company’s non-GAAP revenue to be within the range of $415 million - $435 million.

Recommendation

We maintain our long-term Neutral recommendation on JDS Uniphase. Currently, it holds a short-term Zacks #4 Rank (Sell).

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