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Technology Stocks : JDS Uniphase (JDSU)

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To: Cary Salsberg who wrote (21321)	8/21/2001 9:56:45 PM
From: BWAC	Read Replies (2) of 24042

Cary, I hear what you are saying re 1.32 Million shares and "what kind of revenues are you expecting over the next five years to support your under 10 price." It should be a concern. I think we will see revenues hit around 350 Million per quarter for a short while. Which is where Management is targeting the business to perform at breakeven after they get the plant closings and other assorted downsizings done. Thats my best guestimate and apparently might be Management's best guestimate as well. I've stated before that is the best number we all have to work with. From there, I expect revenues to show a gradual increase. But more importantly I expect earnings per share to show a much stronger increase as those revenues above and beyond the targeted breakeven point will carry around a 45% gross profit with only a little additional operating expenses associated. For instance: Every $100 Million revenue increase above the Breakeven point of $350 Million might yield 30% or $30 Million to profit net of tax. (Tax which JDSU may have substantial writeoffs against. Yet another topic.) Sometime within the 5 year frame JDSU returns to a revenue peak of $900 Million a quarter, generating $160 Million profit. 160 x 4 = approx $640 Million a year. 30 PE at some point as momentum buyers push it up. Price somewhere around $18 Billion or $15 per share with current number of shares. But I don't think JDSU the company will resemble JDSU today in a few respects. Even with this quarters debacle, they generated free cash flow. Closing up some operations and selling the plants may generate some amounts of cash as well. The balance sheet has a pile of cash on it and no debt. $1.8 Billion in cash to be exact. This can be used to consolidate the sector, diversify the business, buyback a significant portion of the outstanding shares, etc. IF I presented you the balance sheet with no name at the top, ex all Goodwill, it would appear strong. Despite the death march JDSU is far from a dead company financially. Should they use this financial position to grow the business with acquisitions then future revenues could be much greater than I expect. And I will stop now, because I am almost sure this post will lead us all back off into Goodwill Land discussions and the talk of prior perceived acqusition failures.

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