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Contributors: Douglas McIntyre Jon C. Ogg

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Thursday, August 31, 2006

JDSU Can't Get Away From Themselves

JDS Uniphase (JDSU) looks like a tale of two miseries. Its shares are down
almost 15% at $2.24 after what can obviously be called nothing less than

The company still has a handful of miserable shareholders who are long and
wrong from many multiples higher, but it has an army of newer shareholders
at lower prices that do not care about them. Going into the earnings report
it would have been difficult to find many that were willing to go on record
saying they think the company is now turning a new leaf. How sad.

The company is stuck in a quagmyre that can only be compared to Iraq. There
is actually still a need for the products, but it just seems like no one
wants theirs. They have a good product, but there are just too many
disinterested participants. The intentions are good, but the ability to
deliver is fleeting.

The company posted revenues of $318.2 million compared to estimates of about
$314.5 million. The company posted net EPS of $0.00 but that was rounded up
from less than a penny net loss per share.

The real issue here is the guidance. While no one was expecting gangbuster
performance for next quarter, they weren't really pricing in a flattish
revenue. The company gave guidance of $312 million to $328 million in
revenues versus an expected $332.5 million estimate, which is still under
most street estimates even on the lower-end of the range.

This would normally be swept under the rug just like a case of spilled milk
from the golden child, but the problem is that since Cisco raised the bar
for telecom and networking equipment providers the stock has somehow managed
to crawl up from $2.13 to a Wednesday pre-earnings close of $2.63. That
means that even though no one was really expecting a gangbuster report, they
were not prepared for yet another weak guidance. The company's problems and
the tragic story are just getting old. The 52-week trading range is $1.54
to $4.30, and $4.00 now seems as long ago as $90.00.

What more can be said. The markets are cruel, and when this happens the
markets just want to pounce and pounce hard on the suspects. JDSU may have
tried to sugar coat this as best as they could, but now they have just
established a lower resistance level that will encourage new sellers to take
profits when they can.

Jon C. Ogg
August 31, 2006

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