Shareholders give executives star treatment;
Incredible returns guarantee euphoric annual meeting
Bert Hill and Karyn Standen
The Ottawa Citizen
They are gray, balding and
definitely middle-aged. They
makes jokes with Australian and
Slovakian accents. They don't
look or sound at all like Nick
Carter. But at yesterday's JDS
Uniphase Corp. annual meeting
at the Chateau Laurier, Kevin
Kalkhoven and Jozef Straus, got
the full Back Street Boys
treatment from delighted
shareholders.
Take Gilles Legault, chief
information officer at CML
Emergency Services in Hull, for
example. He first bought shares in the former JDS Fitel when it went public in
1996 at the equivalent of about $2 a share. Today his stock is worth millions of
dollars.
"This is fantastic," Mr. Legault said yesterday. "JDS Uniphase is a great
company. The merger of JDS Fitel with Uniphase has produced an outstanding
leader in the fibre optic world."
Or Robert Montesano, a general contractor, who has seen his 1,000 shares jump
by 800 per cent in value in the last 12 months. "I think JDS Uniphase is a
tremendous company with great potential. I think it will rival Nortel as far as
market value and future growth."
David Chow, who works at the National Research Council, said " I was
concerned when it fell recently, but I'm holding solid. I think we are only in the
initial phase of things that are to come for JDS."
Vepe Percival, an administrative assistant at the International Development
Research Centre, bought 25 JDS Fitel shares in the spring of 1998 as part of her
first venture into investment. "I picked JDS on the advice of a friend. It has been
a wonderful investment."
A happy shareholder from Vancouver introduced members of the JDS Fan Club
on the Yahoo! Finance bulletin board and presented the two top executives with
gifts.
Of course, the JDS executives know they have fans in the financial world. It's
hard not to when your stock has jumped in value by more than 120 times since it
was issued at the equivalent of about $2 just three years ago.
Big U.S. mutual funds like Fidelity, Putnam, Janus, Oppenheimer and Franklin
have loaded up with JDS stock. The cautious stock pickers who run the pension
plans of Ontario teachers, California municipal workers and Wisconsin public
servants have gotten on board. Even George Soros, the legendary hedge fund
investor who has triggered runs on the currencies of some Third World
countries, has bought into the company.
Many top analysts from across North America were at yesterday's annual
meeting scrounging for information they can relay to investors. Many of them
appear regularly on U.S. business shows to sing the praises of JDS.
The reason? They all think JDS Uniphase has a chance of building the nuts and
bolts of the fibre-optic revolution of future decades just as Intel emerged as the
supplier of choice to the micro-electronic revolution.
JDS staff did a good job of warming up the more than 600 shareholders at the
meeting. There were the gifts of Mr. Straus' trademark black wool beret and a
picture book of art prepared by the children of JDS employees in Ottawa.
A year ago, JDS Fitel shareholders got plastic wind-up toys. This year they
found tiny koala bear dolls clinging to the back of chairs.
Mr. Kalkhoven and Mr. Straus then put on a show, with Mr. Kalkhoven spinning
the vision and Mr. Straus explaining how it will be done.
Mr. Straus said JDS alone among all its competitors has the most complete range
of fibre-optic products for an expected quadrupling of world sales to $21 billion
U.S. by 2003.
"After 20 years of growth we are the first company to achieve a sales rate of $1
billion in annual sales in our business and we will be the first $2-billion
company."
Mr. Straus said the company will run very fast while constantly looking over its
shoulder. "We have to be paranoid dreamers if we are to stay ahead of the next
wave of technology."
He said that customers are demanding new equipment faster all the time. Where
once they waited for six months for an expansion of continental bandwidth, now
they want it in two weeks.
"There is a risk we will mess up. We have no monopoly on smarts."
When one nervous investor worried about JDS' ability to manage the fast pace of
growth ahead, Mr. Kalkhoven joked that if earnings falter, "I'll blame Joe."
Mr. Kalkhoven's look at the company's finances and future was peppered with
applause from the audience. Mr. Straus turned what could have been a dry
explanation of the company's technology into a standup comedy routine that
included jokes at both his and Mr. Kalkhoven's expense.
And the two men even managed to educate shareholders on strange science at
the heart of JDS, a science which sends telecommunication traffic on tiny pulses
of light down thin fibres of glass faster, cheaper and more reliably than anything
else on earth.
There were parochial questions. An Ottawa investor worried that it may be years
before there is another annual meeting here because JDS Uniphase also has a
second headquarters in San Jose and operations around the world.
Mr. Kalkhoven promised there will be at least one major meeting for shareholders
in Ottawa annually.
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