CREDIT SUISSE FIRST BOSTON CORPORATION
Equity Research
CSFB Tech Daily
Chris Kwak
DJII 9281.33 +81.10
Nasdaq 2477.34 +70.20
RESEARCH UPDATE
Uniphase (UNPH-$80 3/4-Cap $3.2B-BUY) James P. Parmelee, (212)
325-6191 Announces $6.1B Merger with JDS Fitel; View as a
Strategic Positive 1999E:$1.21, 2000E:1.75 * Product match
excellent as UNPH's leading market share in active optical
components complements JDS's leading position in passive
components; Merged company will boast an unmatched ability to
deliver modules to customers that integrate active and passive
elements; Annualized top-line run rate for merged company
(Q4:98) equals $550 million. * Significantly enhances the
position of both companies with leading OEMs including LU, NT,
ALA, CIEN, Pirelli, GIC, SFA; Merged company will be able to
deliver modules to OEMs in a significantly shortened time
period; Project first modules could emerge within 6 months of
planned closing of May-June 1999. (LU-$113 7/16-SB), (NT-$62
13/16-B), (ALA-$22 3/4-H), (CIEN-$21 5/16-NR), (PIREF-2.75-NR),
(GIC-$34 5/8-H), (SFA-$30-H) * Positioned as a merger of
equals, although UNPH execs named to CEO, CFO, and CTO slots;
Exchange ratio set at .50855 JDS Fitel share per Uniphase (JDS
Uniphase) share; Represents approximately a 2% premium to the
closing price of JDS FITEL stock; * Merger to be accounted for
as a purchase; Project charges will total $2 B-$2.5 B; Est
annual goodwill expenses could equal several hundred million to
be amortized over 3-5 yrs; Before charges, merger expected to
be immediately accretive; Mgmt conservatively projects several
cents of upside to our F00 est; We believe potential exists for
more significant accretion in F2000. * Issues to track include
"merger of equals"; It is important that responsibilities be
clearly defined among senior mgrs for the organization to
function effectively; In addition, integration plan crucial as
the combined company has 15 major facilities in 8 countries
(3,600 total employees). * View merger as strategic positive;
Significantly distances combined company from competition; Est
top & bottom line growth profile will exceed 50% w/ oper'g
margins in high 20s; Reiterate BUY * Investor conference call
planned for 8:00 am EST today; 1- .
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