JDS Uniphase Corp.
) reported strong financial results for the fourth quarter of
fiscal 2012, beating the Zacks Consensus Estimates. The company's
newly launched products accounted for 58% of its total revenue in
core network market. Overall, book-to-bill ratio remains greater
than 1.0 throughout the quarter.
Despite these positives, we remain concerned regarding the delay
in carrier order due to a volatile global macroeconomy. Recently,
consolidation trend in the optical gear manufacturing industry as
well as in the telecom carrier industry may act as a spoiler for
the optical component suppliers such as JDS Uniphase.
Nevertheless, the newly launched differentiated products of JDS
Uniphase, which are gaining encouraging market traction coupled
with its recent acquisition of Dyaptive and GenComm may become
long-term positives for the company. We believe JDS Uniphase is
currently fairly valued and thus reaffirm our Neutral
Optical Networking component sector is highly competitive. The
company competes fiercely with several players, such as
Oplink Communications Inc.
), to name a few. Despite competitive threats and macro-economic
headwinds, JDS Uniphase's performance was quite commendable.
We believe Communications and Test Measurement division of JDS
Unipahse will be immensely benefited from massive growth of
wireless backhaul and DOCSIS 3.0 networks.
As the wireless carriers are gradually increasing their backhaul
capacity due to significant growth of mobile Internet traffic and
multimedia applications, the cable operators are quickly deploying
DOCSIS 3.0 networks in order to remain competitive by means of
providing faster data access speed. Several industry researchers
have estimated that the market size for mobile backhaul Ethernet
equipment may exceed $5 billion by 2014.
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