El, thanks for the note. There were a number of downgrades today and the stock closed up a few pennies before 100 shares pushed it down a quarter in after hours. The volume was heavy today. It produces over $1 billion in TTM EBITDA, multiples of what JDSU has. Moreover, JDSU has 57 billion dollars in unamortized goodwill, while it's market cap is about 17 billion. That is a net write off coming for them of about $40 billion. Yikes! And you thought Compaq had big write-offs. In the worst bear market of the last 25 years GLW is still going to make a buck -- that sounds good to me -- not to mention the enticing 6 cent dividend coming in June.
Anyway, I expect it to be choppy trading but resume the uptrend as soon as the mutual funds and institutional clients are done repositioning their portfolios. The conclusion of the Lucent deal (which I do not think GLW will get for antitrust reasons since they already are the largest player in the market by a long shot) will be an additional catalyst. GLW will make sure the buyer does not get it for a song. By so doing, they will control the market price with a lower cost of production and debt, virtually dictating the margins.
Today the GLW said it believes that much of the dark fiber in the ground will be replaced with more advanced fiber such as the LEAF fiber they produce because the dark fiber is uneconomical for the new applications being developed. Sure makes one wonder. Their projections, GLW says, incude a major haircut on the orders OEMs say they are going to make, so I think there is good upside from here once the buying mood returns.
Good luck and have a great weekend. |
