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

To: PLeaps who wrote (12337)	8/17/2000 11:17:35 PM
From: D. Plen	Respond to of 24042

From today's National Post : Furukawa - the back door to JDS by Thomas Hirschmann National Post JDS Uniphase Corp. is the Canadian company that's really American but the Japanese own the largest stake. Welcome to global investing. You can buy JDS Uniphase stock in Canada and put it in your RRSP. You can buy it in the more liquid U.S. market. Or you can buy its largest shareholder, Furukawa Electric Co. Ltd., and get JDS bundled with all the other stuff the Japanese firm does for just a slight premium. It used to trade at a deep discount. "When I bought Furukawa it was for about half off. I was getting JDS for a 50% discount," said Derek Webb, who holds the stock in the Landmark Global fund he manages for C.I. Mutual Funds Inc. "Last year we just backed up the truck to it." If you'd bought Furukawa at the beginning of the year, you also would have made a lot more money than if you'd bought JDS. JDS (JDSU/NASDAQ) is up 398% in the past year while Furukawa has climbed 452%. But investors have only just caught on to the Furukawa play, according to Mr. Webb. Furukawa has dramatically outpaced JDS year to date, up 119% compared to JDS's 48%. As investors have caught on, however, the discount has disappeared. The company has also been selling JDS stock to realize its gains. Furukawa owns around 16% now, but it used to hold about a quarter of the U.S. fibre play. Prior to completion of the merger of JDS Fitel Ltd. and Uniphase Corp., the Japanese wire, cable and light metals manufacturer was working with CIBC Wood Gundy Securities Inc. to complete a deal of its own. Furukawa -- which makes fluoric glass fibres and optical fibre cables in the United States and holds patents in fibre coating technology -- completed a previously announced private placement of JDS Fitel shares through the brokerage. It picked up more than 3.1 million shares at $60 apiece, topping up its JDS Fitel holdings to 37.4 million common shares. On Feb. 16, 1999, when the private placement was completed, it held a 52% stake in JDS Fitel. Furukawa would become the largest shareholder of the new JDS Uniphase Corp. That stake has been shrinking. According to Bloomberg, Furukawa held a 19.4% stake with 144.7 million shares as of the end of March. It sold a 7.7 million block of shares at the end of June for proceeds of US$962.5-million. In July, CNBC said the firm was planning to offload 50 million shares, a statement the company denied, saying it planned to sell shares "a little at a time." It was last reported to have a 16.2% stake, with a holding of 126.8 million shares -- still the largest single JDS shareholder. That stake is now worth US$18.7-billion. Furukawa's market capitalization is ¥220.3-trillion or US$20.2-billion. It is now at a slim premium to its stake in the US$115.6-billion U.S. company. But that barely factors into Furukawa's operating business. Although sales have been slumping in most of Furukawa's core businesses over the past three years, it still had revenues of ¥504.8-billion (US$5-billion) in 1999. Moreover, it appears to be on more solid footing in 2000. The cable and wire maker's long-term credit rating was recently raised by Japan Rating and Investment Information Inc. to "A+" from "A," because of rising IT sales. Atsushi Yamaguchi, an analyst at Jardine Fleming Securities, said at the beginning of the month that Furukawa "may boost sales for its wavelength division multiplexing business to ¥85-billion from its forecast ¥55-billion for the year ending March, 2001." He upgraded the stock to "buy" from "hold" in July after the company said that it will double monthly production of optical fibre parts this year. At least eight analysts have put out recommendations on Furukawa this summer, with a couple raising their ratings. The company has received six "buys" and two "holds" in the past two months. One thing's for sure, no one is attributing the stock's surge to Furukawa's aluminum can manufacturing business. At the root of the stock's strong performance of late is the JDS Uniphase stake. JDS has been on a tear. On July 21, the stock soared 12% in one day after it was added to the Standard & Poor's 500 index. It is now the 27th-biggest stock in the broad, capitalization-weighted U.S. index. Where JDS's stock goes, Furukawa is sure to follow. On the Tokyo Stock Exchange, the stock (5801) rose as much as ¥340, or 12%, to ¥3,240 on the day JDS was added to the index. How to get in on the action? Furukawa is one of the new breed of stocks that trades essentially around the clock. You can trade it first in Tokyo, then in Stuttgart (FKA) and finally in New York (FUWAF/NASDAQ). In the United States and Germany, the stock is a lot less liquid. In Japan, 4.0 million shares trade on average. In the United States it's 4,000 on average and in Germany it's more like 400. That lack of liquidity has meant the foreign-traded stock has made much higher returns in the past year than the Japanese stock, up 772% in the United States and 583% in Germany. FURUKAWA ELECTRIC CO. LTD.: President: Junnosuke Furukawa Ticker: 5801 Listed: Tokyo Stock Exchange, Nasdaq and Stuttgart stock markets Head office: 2-6-1 Marunouchi Chiyoda-ku, Tokyo, 100-8322 Telephone: (81-3) 3286-3001 www.furukawa.co.jp thirschmann@nationalpost.com