the following is FWIW because, although some interesting comments on SCMR, this guy clearly did not understand or report what really happened with JDSU.
Sycamore and JDS Uniphase: A Tale of Two Companies -- 11:00 AM EST
by Fayad Abbasi (IDEA Advisor ???)
Yesterday, we heard from two companies going in different directions. Sycamore [SCMR: Nasdaq] announced the results of its January quarter and JDS Uniphase [JDSU:Nasdaq] revised guidance for its upcoming year. While both stated growth to be slowing, as expected, we think the outlook for Sycamore is much better than JDS Uniphase.
Sycamore announced earnings of $0.06 per share, ahead of Street expectations of $149m in revenue. However, the key was guidance. The company did state that forward growth will be more difficult given the market conditions. We think the company is still on track to do about $600m in revenues this fiscal year, and over $1bn in 2002. As such, the company trades at a price-to-sales ratio (P/S) of about 6x 2002 estimates. We believe the stock still offers good upside.
One of the more interesting notes from the call was the company's EtherOptics initiative. By deploying Ethernet over its intelligent optical network, Sycamore can expand its revenue streams. We believe there were two products that will have modules for EtherOptics: the SN10000 long-haul transport platform and the SN3000 optical access switch.
The company also added two new customers, Vodaphone [:NYSE] and CoreExpress, bringing the total to about 14. By diversifying its customer base and expanding its product offering, we think the company is doing a great job of creating organic growth.
JDS Uniphase, on the other hand, lowered guidance of the combined JDS Uniphase/SDL entity. The company cited slower capital spending by telecommunications equipment companies as a source of the slowdown. While the company still believes it can meet its overall growth rate, near term inventory issues are a concern.
We believe that once a growth-through-acquisition story has run its course, valuations come down dramatically. While the company is expected to earn $1.87 in its 2003 fiscal year, giving JDS Uniphase a price-to-earnings ratio (P/E) of about 20x, we think the earnings number will come down and that overall, the stock could trade in a range. The momentous gains of the previous years are gone and investors expecting to see those levels of growth will be disappointed. |
