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Gold/Mining/Energy : JDS Fitel

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To: Dave Macki who wrote ()	12/14/1996 7:25:00 PM
From: Ted A. Nieumierzycki	of 815

Dave I recently read an article in the latest copy of Canadian Shareowner (November/December 1996) where they did a technical analysis of the stock. These are quotes from the CS article: "Founded in 1981, JDS Fitel is: (1) a Canadian manufacturer of high-tech components (57% of revenues) and instruments (16%) for Fiberoptic systems; and (2) a reseller of fiber optic products (27%) manufactured by its majority shareowner - The Furukawa Electric Co. Ltd. - and other manufacturers. Furukawa is one of Japan's largest producers of fibreoptic cable and installation equipment." "For the fiscal year ended May 1996, world wide exports accounted for approximately 95% of sales - principally to the US (68%)." "JDS has many large and small-company competitors for many of it manufactured and resale products. However, based on market share, the company is currently among the top three suppliers for most of its component products. Competition fo resale products is quite market-specific and dominated by such large companies as Fujikura, Sumitomo and Siemiens. Competition is generally fragmented in the company's fiberoptics test and measurement products." JDS' IPO was 3/96 with 7.8 M shares offered at $12.00. I believe I read that there was a secondary issue done later, which makes sense as the current # of shares outstanding is 23.9 M. This means that the market capitalization is around $525.8 M. The company has zero long term debt with more than $40 M cash meaning that it can reinvest (including acquisitions) and accelerate growth. The closing price on 12/13/96 was $22.00 down $0.25 on a volume of 8230 shares. The thinly traded volumes seem to be pretty typical of the stock. I believed that the stock may be overpriced at $22.00 when I first started my research. I don't believe that now. If you buy, it's my opinion that a long term hold will make the most sense. It's also my opinion that any company that's into fibreoptics that has a similar minded major shareholder willing to share technological advances has to be well positioned for future growth. Besides that, with the North American thirst for telecommunication transmission capacity growing, fibreoptics is a much better solution to the problem than is copper wire. Hope this helps. TTFN Ted

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