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Thursday, November 02, 2006

What's on Tap for JDS Uniphase Earnings (JDSUD)

Whenever I look up JDS Uniphase (JDSUD), it just feels like becoming a member of Helnwein's infamous "Boulevard of Broken Dreams."

The company is expected to report earnings after the close, and no one is excited. The company has managed to post 1 net profit in recent quarters, but fell back to the loss game last quarter. The street is expecting $0.00 or $0.01 for EPS and expecting $321 to $322 million in revenues. Back on August 30, the company gave guidance for the quarter of $312 million to $328 million.

It is projected to make $0.06 EPS and $342 million in revenues next quarter. Please keep in mind that it is very possible there are errors in the EPS target as a result of the split, mainly because so many analysts have essentially boycotted coverage of this name now. With all of the options issues abound, many tech companies have also only released revenues and it wouldn't be a shock if they did the same.

The company has tried every trick in the book to move the stock, but those that still care about the name just want to know if the company can EVER get off its back. On October 17, its price reflected its 1 for 8 reverse stock split. The reverse stock split dropped the share count from 1.7 billion outstanding down to 211 million, although it still now has 1 Billion shares authorized.

If the company actually meets revenue targets it will mark at least the fourth consecutive revenue growth quarter on a sequential basis. As far as stock performance it closed down the first day of the reverse split from $17.07 adjusted down to $16.60; and it closed on a post-split low yesterday of $14.04 on 4.7 million shares. Its adjusted price back on the first day of the quarter was $19.92. On the first day of the April quarter JDSUS shares were at what would be an adjusted priuce basis of $32.64.

The company just hasn't been able to show any strong body language. With Cisco (CSCO) as a re-emerged tech leader, with the fiber to the home from telecoms, with the IPTV initiatives, with the Cable Triple Play, with the explosion of bandwidth needs from online video, with the wireline needs from wireless operators, and even with a strong market......well, you get the idea.

The company's adjusted market cap is now $2.88 Billion. As of last quarter it carried 1.238 Billion in cash and short-term securities; total assets minus goodwill, intangibles, deferred, and other items of $2.018 Billion on a rounded basis. Itcarried $422 million in short-term obligations and total liabilities after net debt was listed as $1.481 Billion.

What can the company do? No one can acquire it because there are so many shareholders that are just buried in the name and because the company has perhaps the largest back-dated loss restatements out of any company remembered. It has the shares authorized to issue stock to make acquisitions, but if you know of a company that would agree to be acquired by JDS Uniphase only with stock then they are the same one sthat would try to buy the London Bridge with an I.O. loan.

The company will trade with the D in JDSUD ticker until November 14, which is also the date of its annual stockholders meeting. That meeting is probably a tad shy of being full of cheers and love.

Jon C. Ogg
November 2, 2006
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