CEO Defends JDS's Costly Buying Spree
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July 27, 2001
(Figures in U.S. dollars unless noted)
TORONTO, July 27 (Reuters) - JDS Uniphase <JDU> <JDSU> chief executive Jozef Straus defended on Friday his company's acquisition spree that led to a $50.6 billion annual loss, saying the purchases had propelled it to be the world's largest supplier of fiber-optic components.
"Had we not done what we did, and told customers when there was a boon that I didn't want to do it because I didn't want to fire 5,000 people, some little guy would have got the business," Straus told Reuters in an interview.
JDS has grown from a company with $40 million in revenues five years ago when it was a small Canadian firm called JDS Fitel, to a fiber-optics powerhouse with $3.2 billion in revenues for the year ended June 2001.
Straus said that is an 80 percent increase in sales from 2000, in a period with six weak months.
"Its staggering that you could grow the company 80 percent with six months in a downturn. So, clearly, when the business is there, we are positioned to get going," said Straus.
Since June 1999, when JDS Fitel merged with Uniphase Corp. to become JDS Uniphase, the combined company has made 10 acquisitions for $39.2 billion. On Thursday, JDS adjusted its balance sheet by $38.7 billion to account for the eroded value of these investments.
Shares outstanding have grown to 1.32 billion, tripling from the pre-acquisition count of 427 million, meaning that every dollar earned must be divided by three for a per share earnings figure.
"It is a dilution effect, and sure enough we don't have the earnings to support it now, but we are going to get there," said Strauss.
He also said the company is on a firm financial footing with about $1.6 billion in cash, and a strong customer base with industry-leading technology.
($1=$1.54 Canadian) |
