THE SUPPLIER
JDS Uniphase, San Jose
PROS: Already sells to most telecommunications equipment manufacturers
CONS: Overweight corporate structure could sink in rough industry waters
STRATEGY: Slash costs, tighten customer relationships
In a recent presentation to financial analysts, JDS Uniphase chief financial officer Tony Muller illustrated the telecommunications industry's rough waters with a photo of a kayaker about to shoot down a very steep waterfall. ``Many of the companies will not have a happy ending -- but the river will continue to flow. It will be full of fish, and we're still part of one of the great markets of all time,'' he said.
JDS' goal: To remain the best-positioned provider of fiber-optic components when the industry recovers. A series of 38 acquisitions -- mainly over the last two years, either by JDS or the companies it has purchased -- made JDS the industry's largest components supplier. But the company also became bloated, particularly after big systems customers such as Lucent, Nortel and Cisco slashed purchases. JDS expects $600 million in revenue for the three months ended in June -- $100 million less than it had originally projected. The decline isn't over: For the next quarter, JDS says, revenue will fall to $450 million.
``Nine months ago, it was, `Please ramp up and deliver more and more and more,''' said JDS chief executive officer Jozef Straus. ``Today, most of the customers are really asking us, `Make sure your products are fundamentally providing new solutions to us and have higher value for the same costs.'''
Straus focuses these days on forging tighter relationships with customers and understanding their changing needs.
Internally, JDS is aggressively cutting costs, with 8,000 layoffs so far. It has shifted significant manufacturing operations to lower-cost China. More job cuts and consolidations are likely to be announced when the company next reports financial results, on July 26, Muller said. After all the acquisitions, ``we did go into this downturn with some redundancies,'' Muller said.
Still, the company has a noteworthy $1.5 billion in cash. ``There are companies in our industry that are running out of cash,'' Muller said. ``It is a very deep recession - a depression, I would say.'' |
