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

To: peggylynn who wrote (11011)	6/22/2000 7:40:00 PM
From: wopr1	Respond to of 24042

Meger: It appears that DOJ did not require much. At most, JDSU/ETEK gave up the right of first refusal. While that is an important right, JDSU is still free to continue purchasing and selling these items, contract with any party, and, as you point out, no divestiture. Further, in the long run, loosing the first refusal right should have little effect. I assume that these Output contracts had a termination date. Thus, in the end, we would loose the first refusal right at some point in the future anyway. In their consent decree with the DOJ, JDS Uniphase and E-TEK have agreed to relinquish, over a 90-day transition period, E-TEK's contractual rights of first refusal with respect to the output from coating chambers used for the manufacture of thin-film filters owned by Barr Associates, Herrmann Technology, Inc., Hoya Corporation USA, and OCJ Corporation (the "Filter Vendors"). Specifically, at the end of 30 days following today's signing of the consent decree, the companies have agreed not to enforce E-TEK's rights of first refusal with respect to 30% of each Filter Vendor's filter manufacturing capacity subject to those rights. After the second thirty days of the transition period, the companies shall not enforce E-TEK's rights of first refusal with respect to 60% of such manufacturing capacity; and at the expiration of the transition period, the companies shall not enforce any rights of first refusal remaining in E-TEK's supply agreements with the Filter Vendors. -wopr

To: peggylynn who wrote (11011)	6/22/2000 8:12:00 PM
From: pat mudge	Respond to of 24042

I would assume that the competition would be getting some of the share that JDSU/ETEK had first dibbs on. However, JDSU is expanding production at OCLI. I assume this is to make up for any potential shortfall in thin film coatings from the DOJ ruling. IMO, it is excellent news as DOJ did not require an OCLI divestiture. - peggylynn To help understand what's involved, I've copied a couple segments from the DBAlexBrown Optical Networking report: Filtering/Wavelength Separation Technologies There are a number of different technologies used to separate wavelengths in a DWDM system such as thin film filters, fiber Bragg gratings and planar waveguides. our research indicates that over 70% of the DWDM sytems today use the thin film filter as the preferred technology. As channel counts continue to rise and spacing decreases 100Ghz and beyond, thin film filters become very expensive (almost double the cost per channel) compared to Arrayed Waveguide. In lower channel count systems, thin film filters remain clearly the lower-cost technology. Filter research is concentrating on decreasing cost and spacing for high channel count systems and on developing tunable filters that can be used in conjunction with tunable lasers for next generation systems and optical switches. * Fiber Bragg Grating (FBG) Fiber gratings are devices that can be used for a variety of applications and are used in filtering, add/drop functions, and for compensating for dispersion. A fiber Bragg grating is essentially a filter, and acts like a mirror for a particular wavelength. It is a piece of fiber treated with two interfering beams of ultraviolet light that form an interference pattern within the core of the fiber. The ultraviolet light is used to permanently alter the refractive index of the core along the length of the fiber, which allows particular wavelengths to reflect. Fiber Bragg gratings are also used in dispersion compensation and gain flattening. * Arrayed Waveguide Grating (AWG) Planar waveguide gratings, or arrayed waveguide gratings, offer a second method to filter wavelengths of light. This technology, employed by Lucent Technologies in its DWDM systems, utilizes an interference effect between different waveguides of progressively longer optical path length on a planar substrate. Research and development continues on AWG in order to reduce cost of packaging and increase yields in order to make them more cost competitive with TFF(thin film filters) and FBG (fiber Bragg gratings). AWG is presently less expensive than TFF in high channel count systems given that a separate TFF is required for each channel whereas only a single AWG is required per fiber. Furthermore, advocates of AWG technology cite lower attenuation loss so high channel count systems using AWG can increase the distance between amplifiers. * ThinFilm Filter (TFF) Dielectric filters constitute a third type of grating. These thin film filters are used to maintain the separation between channels,a nd our research indicates this technology is the preferred method used approximately 70% of the time. Optical Coatings Laboratories (OCLI) manufactures about 80% of all DWDM thin filters. The basic science behind thin filters is well known but manufacturing to the required degree of precision is extremely difficult. The degree of difficulty increases significantly each time channel count increases. Thin film coatings, a few atoms thick, are deposited onto the surface of a material-like glass such that only a single wavelength can pass. Successive coatings are required for each individual wavelength to be used in the system. Filters require several hundred layers of deposition with extremely tight tolerances in large vacuum chambers. As wavelength count increases, the demand for lesser spacing between wavelengths becomes critical. OCLI dominates this technology with leadership in 100Ghz filters and is rapidly moving to the 50Ghz level. Thin film filters have been preferred because of this attractive relative cost (despite the manufacturing complexity) and solid thermal performance. Going forward manufacturers will need to address the issues increasing attenuation that occurs in high wavelength systems and TFF performance at 25Ghz. >>>> From H&Q's report at the time of the OCLI acquisition: Improves gross margin --- Through its existing joint venture, JDS Uniphase already purchases a majority of its thin-film filters for its DWDM modules from OCLI. Last quarter, 44%, or $39.2M of OCLI's revenue, was attributable to telecommunications, and 95% of this, or $37.2M, was sold to JDS Uniphase through the joint venture.

To: peggylynn who wrote (11011)	6/23/2000 9:48:00 AM
From: pat mudge	Respond to of 24042

Chase H&Q comments on ETEK-JDSU merger: * JDS Uniphase received DoJ clearance for the acquisition of E-Tek. * JDS/E-TEK accepted mild terms for clearance: essentially, E-Tek forfeits its refusal rights provided in its thin film filter (TFF) supply agreements with certain outside suppliers. * Currently, E-Tek has preferential refusal rights for TFFs at Barr, Herman (Lucent), Hoya, and OCI, the other major TFF suppliers, aside from OCLI. E-Tek originally obtained these rights in exchange for the financing of coating chambers used to manufacture TFF's. * The refusal rights will be eliminated over a 90-day period from yesterday's date. After 30 days, E-Tek will relinquish refusal rights to 40% of each vendor's TFF capacity; after 60 days rights to 60% of capacity will be relinquished with total refusal rights eliminated after 90 days. * After this point, JDS/E-Tek will still be able to buy from these vendors, though must compete for supply with other customers. Given that the combined entity will be the largest WDM vendor in the market, we believe there will be no meaningful disruption to the supply chain. Additionally, the strategic rationale for the OCLI acquisition was to secure this supply internally. To this end, JDS expects to further hasten capacity expansion at OCLI. * The E-Tek shareholder vote has been scheduled for June 28; following the shareholder approval, we expect the merger to be completed in the first week of July. We reiterate our BUY on JDSU shares.

To: peggylynn who wrote (11011)	6/23/2000 9:58:00 AM
From: pat mudge	Read Replies (1) \| Respond to of 24042

Comments on the merger from JP Morgan: . . . We believe that the likely closing of the E-TEK deal (which should happen on June 30th, following the E-TEK shareholder vote on June 28th) should be a positive catalyst for JDSU, allowing the company to focus on integration and what's next strategically for the combined entity. We also believe that we are likely to see better results from the combined JDSU/ETEK than management is conservatively suggesting as E-TEK's business looks to be in very good shape with Wall Street projections likely being too low. JDSU remains our core holding in the optical components markets and we believe the company will likely continue to set the pace both financially and strategically for the industry. We remain bullish on shares of JDSU and will revise our earnings estimates when the deal officially closes later this month.