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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: 100cfm who wrote (33843)	10/26/2000 5:48:51 PM
From: StockHawk	Respond to of 54805

>>This market is definitely skitzo.<< It does make one wonder about market efficiency and the possibility of manipulation. From 10:15 this morning until about 2:30 the Nas fell quite steadily for almost 200 points, then suddenly, over the last hour and a half it rose steadily gaining, you guessed it, 200 points. So was it that all of America got back from lunch at 2:30 and said - hey look at all the bargains - lets buy, or was it something else? Only the shadow knows.

To: 100cfm who wrote (33843)	10/26/2000 6:52:17 PM
From: Judith Williams	Read Replies (6) \| Respond to of 54805

a good dose of thorazine The JDSU cc provided it. Before highlights, two aspects of the cc struck me. The very evident disgust of JDSU--Josef Straus, Jay Abbe, and Tony Muller--with the recent FUD which had them underscoring from different perspectives the strong growth in the optical sector. Guidance, where JDSU is quite conservative, moved up for the year. Second element was the extent to which the questions at the end attempted to probe for weakness in LU and NT--none of which JDSU would address other than to say its aggregate demand was only capacity constrained and that guidance is based on intense interactions and conversations with its customers, including LU and NT. Thus any downturn in a specific customer, by implication, is rolled into the guidance. Notes on cc: JS: JDSU had a great quarter. Our outlook and guidance for the future and the year is equally strong. I want to address two topics: the industry outlook and our results. Industry outlook: demand is strong for component suppliers. The metro market is now being tapped, the router market is experiencing high growth. Our customer base is diverse and we are shipping higher value-added components. On supply/demand, we are in constant contact with customers. We do not see any inventory buildup beyond what is prudent for supply chain management. Growth will continue and we look forward to the merger with SDLI to give our customers what they want. JA: Sales were 786m, 23% sequential growth--all organic. The telecommunications growth was 26%, well above our high-teens guidance. Active component sales=29% of total; passive, 62%; other 10%, with active sales increasing 113%, and passive 321%. Three 10% customers: NT, Alcatel, LU. 51% gross margin guidance was 50.6% 7.4% r&d expenditure guidance was 8% but off lower sales 11.3% sg&a guidance 11.4% 32.4% operating margin guidance 28-30% 1 billion run rate 29% increase in eps operating cash flow strong JS: new manufacturing and design wins, strong growth in hi-power lasers, 10-giga. modulators limited only by capacity--built new manufacturing facility JA: I will give bottom's up perspective on near term demand; 4x strategy (increasing capacity 4x within 18 months); and integration. demand: 80 sales engineers for each customer in optical systems. Do not see any systemic indication of slackening--in size of order or in stretching out of delivery date. Despite increase in production, no decrease in lead time. Orders are keeping pace with output growth. Q1 over Q4, sales to three 10%ers grew slightly faster than those to other customers, whereas Q4 over Q3 the situation was reversed. Demand remains strong and we are not seeing any meaningful slowdown. 4X expansion: plans are on track for physical expansion, increase in productivity (25% of WDM is now automated), and for outsourcing (Celestica, eg, for optical amplification). Capabilities in three Asian locations--which is cost effective. integration: realigned role of Etek management to present single face to the customer. Passive is now located in San Jose and Ottawa (DWDM components and modules). Expect SDLI merger to close by end of year. Supplying information. No further comment. Guidance for next quarter: high-teens for eps growth sales growth will increase: it was 75%, raised to 90%, but will now be 115% to 120% gross margin: 50% op. margin: 28-30% r&d: 8-9% of sales sga: 11-12% 750m in capital expenditures eps: present guidance 17 cents, move 2 or 3 cents higher year: current consensus 70 cents, move to 80 cents challenge is to expand capacity Questions: UBS Warburg: MEMS product line and which customers growing JS: growing all product lines, full range of customers, some have faster growth, others slower, no customer dominates. Emerging customers are moving forward as well as the established ones. MEMS is in development and testing. JP Morgan: Metro space and relationship with JNPR, CSCO and Sycamore JS: The metro market is starting to move. JNPR and Sycamore are creating "destructive" opportunities and JDSU is being designed in. Expect 40-gig end of next year and it is being moved forward because of customer demand. There is an inflection point in metro and we are getting traction. CIBC: gross margins--are the improvements from skewing to passive or because lower sales to big customers with discount TM: Neither. Improvement due to product mix and gains in productivity. Credit Suisse: passive and active margin trends and the competitive landscape with Alcatel and LU reorganizing. TM: no significant trends in margins with respect to active/passive. JS: we all compete, we will continue to compete SalomonSmithBarney: systems placement and component growth relationship. JA: triple digit growth. Optical segment of systems market growing; merchant segment of components business expanding more rapidly than the captive market. Supply and demand will remain tight for the next several quarters based on our customer's year-long scenarios. First UNION: Thanks for the quarter. We needed it. Why is passive growing faster than active in sales. JA: ETEK acquisition since Etek is entirely passive. JS: product mix also helps with LU--filter amplifiers. H&Q: Which acquisitions are growing faster. JA: All being brought along. OCLI has some nontelecom business that's not so robust. All the telecom business is relatively close to the sequential growth rate. AdamsHarkness&Hill: Thanks for the outlook. Between WDM and Sonet, do you see a Sonet slowdown? And what will the effect be when captive customers spin out? JS: We are a WDM player, our product lines are not relevant on the Sonet side. Captives have been competitors and/or customers--will remain so and we will continue with aggressive development. TM: book to bill is solidly above 1 SG Cowen: great quarter, guys. What about NT citing installation problems. JS: cannot comment on installers. JDSU delivery is strong, but systems installation issues are different from component. DainRauscher: probing LU and NT sloughed off. Interlever. JS: depends on how you build out the metro space. Ottawa and Etek have robust efforts in passive group to optimize this. WittSoundview: Sonet infrastructure as IP infrastructure moves to optical layer. What percentage JDSU responsible for Sonet/DWDM? JS: OC48 sales decline would have no impact whatsoever on JDSU. WRHambrecht: Operating efficiencies. TM: filter manufacturing and within manufacturing production, improvements per employee. Goal is for head count growth to be only 60% of revenue growth. Little shy because of training new employees in Taipei. ABMAmbro: Guidance for LU and NT sales; narrow chanel. JA: NO on LU/NT. We are pushing the AWG area and 25 and 12.5 narrow channel filters. We will be 100% effective in narrow channel, particularly after SDLI merger. EPIC Partner: Metro JS: We are working feverishly on long haul, ultra long haul and metro. Paine Webber: slowdown. JA: It's noise. We have 30 facilities around the world. There will be small variances from 1/4 to 1/4. Last 1/4 we had the boost of Etek. It averages out. UBSWarburg: lead times JA: same as last couple of 1/4s. 50 and 100 gig. amplifiers about 8 weeks. Guidance comes from probing of all customers and includes judgment about demand from LU and NT and is current as of this week not the quarter just past.