NEW YORK -(Dow Jones)- Shares of Uniphase Corp. lost ground Thursday
in a decline attributed, in part, to investor concerns about revenue the
company will sacrifice while it idles a production line to upgrade its
technology.
At the close, Uniphase's (UNPH) shares were down $6.875, or 13%, at
$48 on volume of 5.1 million, well above the daily average of 844,000.
The upgrade will require Uniphase's manufacturing facility in
Switzerland to idle a production line for about a week in the quarter
ending in December, analysts said. According to Soundview Technology
Group's Kevin Slocum, that will mean the loss of about $2 million in
revenue.
And that could have an effect on profits for the optoelectronics
company's fiscal second quarter. CIBC Oppenheimer analyst James
Jungjohann said he expects Wall Street earnings projections will be
trimmed by about one cent a share.
Indeed, the San Jose, Calif.-based company told analysts it expects
second-quarter earnings to be in the lower end of the range of analysts'
expectations, Slocum said. A company official, however, wasn't available
to provide additional information.
According to earnings tracker First Call, Wall Street currently
expects Uniphase to earn 27 cents a share in its fiscal second quarter.
The range from which that figure was derived wasn't available.
Wednesday, the company said fiscal first-quarter earnings rose to
$9.7 million, or 24 cents a diluted share, from $6.2 million, or 17
cents a diluted share a year earlier, on par with Wall Street forecasts.
And while Uniphase's profit was on target, slowness in its Ultrapointe
product lines during the period could also be putting some pressure on
the stock.
Jungjohann said the slowness in Ultrapointe sales could bleed into
the next quarter and have a "slight impact" on earnings. He speculated
the company will sell the Ultrapointe business during the second
quarter, noting that Uniphase has received an offer for it.
Jungjohann declined to estimate how much the business could fetch or
what company might be interested in buying it.
Despite the near-term pinch from the production switch-over and
slowness in Ultrapointe sales, analysts are optimistic about Uniphase's
longer-term strength.
"The company is extremely well-positioned for long-term growth in
this optical component," Jungjohann said.
Slocum said he is confident the company will make up whatever revenue
it loses during the production stop in subsequent quarters.
-Nancy Beiles; 201-938-5393
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