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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: John Guild who wrote (1019)	9/15/1999 10:38:00 AM
From: yzfool	Respond to of 24042

good read:http://www.forbes.com/forbes/99/0920/6407198a.htm see glass houses

To: John Guild who wrote (1019)	9/22/1999 9:40:00 PM
From: LLCF	Respond to of 24042

Just parking this: JDSU is a leading supplier of optoelectronics to the fast-growing optical fiber-based communications industry. It sells source lasers, modulators, pump lasers and other related products. The source lasers create light; the modulators "shape" the light into a signal; and the pump lasers strengthen signals that travel long distances down optical fibers. JDSU's products split light into different colors (similar to the way that a prism splits light into a rainbow). Splitting light into more colors allows more differentiated light -- and thus, more information -- to move through the wire. The concept gets into stuff like dense wave division multiplexers (DWDM ), a technology that's been discussed in context with Cisco's (Nasdaq: CSCO) recent acquisitions of Cerent and Monterrey Networks. The advantage of this stuff is that it enables data carriers to increase system bandwidth in a cost effective manner. Best of all for JDSU is that even though its product is expensive, the customer still saves money by using it. The reason for this is that Uniphase's products are used in equipment that has the effect of expanding a two-lane highway into one with as many as 96 or more lanes. JDSU's customers (Original Equipment Manufacturers or OEMs) don't mind paying up for this magnitude of broadband expansion. Thus, JDSU is able to sell an expensive, high margin products that provide the added benefit of saving money for the user. In other words, JDSU offers its customers a compelling value proposition, which is also a characteristic that it shares with MedImmune. When I look at companies that have not advanced to Rule Maker status yet, this is something that I look for. There's not a lot of competition for JDSU, and the company is far and away the biggest player in its niche. It's also interesting to note that some of its competitors in one area are customers in another (including companies like Lucent, Ciena, Alcatel, etc.). Due to the nature of the business and technology, it's unlikely that one of these companies would readily take share from JDSU, as there are high barriers to entry due to the cost and complexity of implementing the technology used to make JDSU's components. Recently, Uniphase closed a merger with JDS Fitel, hence the name change to JDS Uniphase. The merger is perceived to have distinct advantages because Uniphase makes active components while JDS makes passive ones. Combining the two under one roof should increase market share, as customers will have to deal with fewer suppliers. In addition, JDSU can probably charge slightly higher prices due to the consolidation of these two companies. As part of my research, I also reviewed some of JDSU's historical financial information, as well as the fourth quarter combined financials for the two companies, which can be found in this press release. I didn't find anything that scared me away when I looked through the numbers. The recent stock offering was for general corporate purposes and possible acquisitions. It's harder for JDSU to make an acquisition by using its stock directly because it's more likely to buy a division of a company rather than a whole company. In that case the seller normally prefers cash instead of stock. As an interesting added tidbit, George Gilder, a noted technology futurist with a following among industry watchers, called Uniphase the "Intel of the telecosm." While that kind of stuff should certainly only be taken at face value, it's interesting nonetheless. DAK