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Technology Stocks : JDS Uniphase (JDSU)
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To: Kent Rattey who wrote (300)5/4/1999 5:52:00 PM
From: Roger Brown  Read Replies (1) of 24042
 
April 27th Barron's Interview (Online)

Q: How about another pick?

A: Uniphase. UNPH. This is not a value name. Uniphase is the leading supplier of the technology which enables the increasing capacity of fiber optics phone network. They actually make the tiny lasers that allow service providers to double and quadruple capacity on fiber optic networks. They are the dominant supplier. They have to add capacity to meet demand. And as I said, I believe that the demand for broadband high-speed communications is at the beginning and has a very long-term secular story. So I want to own a dominant component provider, which is Uniphase.

Q: How expensive are they relative to their growth rate?
A: They are expensive. The stock is going to grow about 45% to 50%, [2000 vs. 1999]. And it is trading at like a 70x P/E. This is not a cheap name.

Q: So what makes you confident that that premium is worth it?
A: Well, because unlike many other high-multiple stocks, these guys have a very high probability of at least making their revenue numbers -- because the demand for the products is greater than what they can supply. It doesn't mean that it is risk-free. There are still challenges of building out new capacity. To me it is less of a challenge, [like it is for most companies], that can't be that certain about the demand for their product.
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