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

To: Boplicity who wrote (1753)	11/4/1999 8:04:00 PM
From: Chris Stovin	Read Replies (1) \| Respond to of 24042

And another good report about today's acquisition... Thursday November 4, 7:39 pm Eastern Time FOCUS-JDS to buy supplier for $2.8 billion in stock (All figures in U.S. dollars unless indicated) By Susan Taylor OTTAWA, Nov 3 (Reuters) - In an effort to meet blistering market demand, JDS Uniphase Corp. (NasdaqNM:JDSU - news) (Toronto:JDU.TO - news), the world's No. 1 maker of parts for fiber-optic equipment in phone networks, said on Thursday it will spend $2.8-billion in stock to buy supplier Optical Coating Laboratory Inc. (NasdaqNM:OCLI - news) Under a deal signed late on Wednesday and expected to close in the first quarter of 2000, San Jose, Ca.-based JDS will exchange 0.928 common shares for each share of Santa Rosa, Ca.-based OCLI. The markets roared approval for the deal, which was announced before trade opened. JDS Uniphase peaked at C$294.75 before sliding back to C$279.50 on the Toronto Stock Exchange, a drop of C$2.50. On the Nasdaq it raced up $204-1/8 before settling back to $191-1/2., a gain of 1/16. OCLI added $49 to $168-1/4 to blow past the previous 52-week high of $123-10/16. ''It's how we go about significantly increasing the manufacturing capabilities of JDS Uniphase together with OCLI while, at the same time, adding some product capability,'' JDS Uniphase CEO Kevin Kalkhoven said during a morning conference call with analysts. JDS Uniphase, the product of a June merger between San Jose, Ca.-based Uniphase Corp. and Ottawa-area based JDS Fitel Inc., sells components that boost fiber-optic network capacity and performance. OCLI develops thin-film coatings and components, technology that controls light. OCLI manufactures more than 80 percent of the highly complex filters that help add bandwidth to optical networks. Its technology is also used in tools ranging from medical equipment and computer monitors to fax machines and scanners. ''It was the right, intelligent thing to do,'' said Joe Arsenio, analyst at Hambrecht & Quist in San Francisco. ''This would have turned into a competitive relationship in a couple of years as opposed to a co-operative relationship.'' No divestitures are planned under the deal, which brings together two firms with close ties. JDS Uniphase is a major OCLI customer and since 1997 the firms have worked on some joint product development. In its third quarter, 42 percent of OCLI's $90-million revenue came from telecommunications products. JDS Uniphase represented 95 percent of those telecommunications sales. ''It makes a lot of sense,'' said Lissa Bogaty, analyst at Salomon Smith Barney in New York of the deal. ''They were already heavily reliant on OCLI technology.'' JDS Chief Financial Officer Tony Muller said that under the acquisition, some JDS costs and OCLI revenue will be eliminated. ''We're anticipating that our gross margin should increase, on trend, by something over 100 basis points,'' he said. The deal offers several advantages for JDS Uniphase, analysts said. The purchase takes a long-time supplier out of the reach of any competitors, while also boosting capacity. ''I see this more as a way of securing the supply of this technology permanently,'' said Emil Savov, analyst at Goepel McDermid in Vancouver. ''It's positive.'' The fiber-optic gear sector has seen constraints for thin-film filters, tiny pieces of glass that must be layered with chemicals and great precision. That made OCLI's technical ability a ''crown jewel'', said Duncan Stewart, fund manager at Tera Capital Corp. in Toronto. ''It's a wonderful deal, certainly for OCLI shareholders,'' he said. ''While the price is high for JDS shareholders, this is the sort of thing that they need to do to keep their Lucents and their Nortels happy.'' Nortel Networks Corp. (Toronto:NT.TO - news)(NYSE:NT - news) and Lucent Technologies Inc. (NYSE:LU - news), two of JDS Uniphase's largest customers, are experiencing strong demand for optical networks. The purchase of Optical is the latest in a string of recent acquisitions by JDS Uniphase. It announced a $400-million purchase of Trenton, New Jersey-based EPITAXX Inc. on Oct. 4 and the acquisition of tiny Northborough, Mass.-based Ramar Corp. on Oct. 18. for undisclosed terms. Morgan Stanley Dean Witter also said on Thursday it had initiated coverage of JDS Uniphase with an outperform rating and $225 target price. ($1=$1.47 Canadian) ((Susan Taylor, Reuters Ottawa Newsroom, 613-235-6745, fax 613-235-5890)