re:love the company's pristine balance sheet and zero cash burn :
Yes, the company actually seems to be weathering this downturn as well as can be expected. I believe what management says, that their business will eventually recover, and JDSU is positioned to dominate that market. JDSU is not like WCOM or LU and a list of other former-must-own stocks, that are sinking steadily under a mountain of debt, and whose survival is in question. Companies with a lot of debt, even if they survive, are going to come out of this downturn so severely damaged, they will be unable to take advantage of it, once their customers start buying again. This is especially true in the telecom/equip/component space, which looks to be the very last sector to recover.
But it is the company, not the shareholders, who are doing well. This company continues to pay for a lot of its costs, by printing more shares. This is equivalent to a government that is running a deficit but avoids borrowing any money (= pristine balance sheet and no cash burn), because it just prints more currency to cover all costs (= share dilution). And we are certainly seeing an ongoing severe devaluation in JDSU's "currency", due to this "inflation".
Always have to make a distinction between the company and the stock. |
