Hi Judith, I'm catching up on my reading and just saw your report on JDSU. Very nice! Thanks.
The financials show that JDSU is putting up some impressive numbers.
One key to their future will be the ability of competitors to keep up. Taking a few lines you wrote:
Competition will be fierce and any misstep harshly punished by customers.
The merchant vendor market will concentrate in the direction of two dominant players. Systems providers refuse to be captive of one vendor. At the same time, they don’t want the trouble or time it takes to qualify vendors #3, #4, or #5.
JDSU has by far the broadest portfolio of products, enabling it to put together modules and subassemblies in each of the four areas of optical systems
Markets and Share: 50% in most components; 80% (with SDLI merger) in critical components like pump lasers
Competitors’ Markets and Share: (est.), no single vendor has more than 20%
If those market share numbers are accurate, and if JDSU is able to assemble modules while others do not have all the sub pieces available, then it becomes difficult for customers to switch. Thus your statement above that "any misstep [will be] harshly punished by customers" may apply more to competitors than to JDSU. That, of course is a major G&K advantage, the dominant player often gets a second or third chance, while the smaller competitor gets tossed out for the same offense.
Fleshing out those market share numbers, where available, will be valuable.
Some may recall a few posts I made where I noted that I was trimming my JDSU holdings at around $100 a share, and I wrote some posts a few months back stating that I thought QCOM might be a better/safer short term performer than JDSU. In hindsight, selling almost anything a few months ago would have been smart, but with the SDLI acquisition getting closer and with JDSU getting close to 75% off its high, its beginning to look more and more interesting.
Judith, any more "light" you can shed on this difficult to understand company will be greatly appreciated.
StockHawk |
