We reiterate our long-term Neutral recommendation on
JDS Uniphase Corp.
). The company reported disappointing financial results for the
fourth quarter of fiscal 2013, missing both the top and the
bottom lines of the Zacks Consensus Estimate. Lower-than-expected
capital expenditure by telecom carriers was the main reason
behind this disappointing performance. Management provided a soft
financial outlook for the ensuing first quarter of fiscal 2014.
JDS Uniphase currently has a Zacks Rank #4 (Sell).
Why Kept at Neutral?
Nevertheless, JDS Uniphase's newly-launched products coupled
with the acquisition of Arieso are the long-term positives for
the company. In the last reported quarter, the newly-launched
products generated 65% of the total network revenue. As a
leading supplier of optical components and modules used in 3G/4G
high-speed communications networks, JDS Uniphase is benefiting
from increasing Internet traffic and associated applications. We
expect this trend to continue in the long run.
In the last quarter, each of the three segments of the company
had book-to-bill ratio of 1.0. Both Communications test and
Measurement and Communications and Commercial Optical Products
units have generated the highest order bookings in the last 10
years. Orders were particularly strong for JDS Uniphase's
newly-launched products, such as laser diodes for gesture
recognition, datacom pluggables, solutions for increased capacity
and faster connectivity for fixed and mobile networks.
Verizon Communications Inc.
Cisco Systems Inc.
) and Time Warner Cable are some of the major clients of JDS
Uniphase. They use the company's instruments and test tools to
optimize their respective communications equipment and broadband
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