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Technology Stocks : JDS Uniphase (JDSU)
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To: Kent Rattey who wrote (232)4/26/1999 8:34:00 PM
From: Roger Brown   of 24042
 
A combined brief analysis:

By overlaying both firm's last reported quarters, one can get a
better sense of what the next quarter will be for UNPH shareholders
as the merger should be closed by June 30th. This includes
converting JDS 2/28 Canadian$ into US$ at 1CA$=.68US$ (last
reported quote on Yahoo Finance). The firm will be ~ 50% Uniphase
and 50% JDS, thus the below numbers are purely combining each
firm's Income Statements. The percents are percent of sales.

Net Sales 157.9 Million US$
COGS 76.2 48.2%
Gross Proft 81.7 51.8%

R&D 14.0 8.9%
SG&A 18.3 11.6%
Other Income 2.2 1.4%

Income 51.6 32.7%
Taxes 17.8 11.3%
Net Income 33.8 21.4%

The firm is growing at a combined 82.3% (109.6% JDS, 55% UNPH).
Net income as a percent of sales is solid at 21% (which might
bump up some post merger).

The quarterly sequential growth rate that supports 82.3% is 16.2%,
thus our net income at the same tax rates might well be $39.3
Million next quarter, and then pro-forma from there.

At $121.375, the firm has a market cap of $4.855 Billion
(Double that with JDS and get $9.71 Billion for JDS Uniphase).

Annualized Net Income for the past Q is 33.8*4=$135.2 Million.

Shareholders of the combined firm are paying approximately 72 times
annualized earnings (9.71/.1352).

72 times annualized earnings for a firm growing 82%.

Sure I might have missed some stuff off the balance sheet, yet
I did notice that R&D was not capitalized (expect for purchased
R&D which is different) which is very conservative (ie, not
aggressive) accounting.
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