Nortel is also saddled with tons of legacy circuit switching business lines that are growing at nominal rates (or declining). True,their optical business is growing very fast and they are an excellent customer of JDSU, but it represents a small part of the overall company.
JDSU otoh, is a pure play in the fastest segments of the photonics markets. In addition, JDSU plays at the layer beneath NT. I don't care if LU, NT, CSCO, Pirelli, Ciena etc. win the Service Provider contract, because in the end, JDSU supplies them all. That is the smart way to play a space and as such, deserves a higher premium. One look at the difference in growth rates between NT and JDSU can show you that.
Anyone who has followed my posts over the years, knows I do not hype stocks. I simply state why I like certain names based on their technology and position in the space. NT and JDSU cannot be compared on an apples-apples basis.
Btw, by my calculations, JDSU trades at around 85x forward earnings. As the company is expected to grow at least 60% (recent growth in the comm line at both JDS and UNPH approached 100%), the multiple is more than justified by the growth.
Bulldozer |
