Did JDSU ever address their rising accounts receivable number reported on their balance sheet for 12/31/00? I noticed a/r was up 65% from the previous quarter.
I recall there was some build-up in passives that was being worked through. None in actives --- still long lead times.
I took notes on their most recent CC, so for what it's worth:
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JDSU stockholder update from Ottawa, January 31, 2001
Josef:
Welcome you to shareholder update --- those who braved weather and those on webcast.
State of affairs and how we positioned JDSU with respect to industry, market and customers. We are in midst of telecom revolution. Similar to invention of press in 1420s. That led to printing, science, and then all the high tech leading into 20th century. This led to computer revolution. Microprocessors, and development of computers and PCs has exploded with introduction of fiber optics, wave length . . . and JDSU is participating. Capacity of FO links are doubling every 6 to 9 months. We are part of major revolution. Internet is only the beginning. Only through FO is this enabled. Incredible growth in business, installations in FO, as well as what the Internet will bring. But Internet is only crude version of future. Internet is only about 4 or 5 years old. This is only just the beginning. Next wave is Internet that will require higher bandwidth [lists applications]. . . which I really look forward to. If we look at promise of bandwidth we see real applications in some communications, medical, real-time data, or perhaps in fact I could do homework with my son when I travel. Dilemma of potential slowdown in carriers and telecommunications --- from reading newspapers --- spending is decreasing. . . revenues decreasing. What is the answer? Communicating with customers and allowing lower cost solutions. Must provide answers to customers needs. Transmissions at 40 wavelengths, 10 gigs, all brings down cost considerably. Critical figure is gigs and wavelengths --- costs decrease and permits carriers to continue building networks. Capital costs may be slowing down. But when you look behind the numbers, we find fo is the only means that allows transmission systems to lower costs. Allocations of capital costs 2001, indeed the optical segment is in fact increasing from 11B to 15B, and growth in O industry is 40%. This gives us hope in the industry. Looking at dev of new systems, there is increase in content. Content increases 2 or 3 times and increase in modules where JDSU is participating. Growth mechanism --- access and metro market. Until now focus was submarine and local networks. Now FO to consumers. Also wireless with dev of new standards. With 2megs to each consumer it would drive demand even further. Must understand economic metrics of customers. Would love to share how carriers see industry. [video with carrier testimonies]
We are at the beginning. . .
Let me continue to tell you how we will partner with our customers. Co. has developed broadband foundation --- both passive and active components --- and have entered successfully into module business, with high degree of complexity and functionality. Customers don’t need individual tool-kits, Lego blocks, and can build systems faster. We have brought forward several new products and will continue to do so. If you look at entire optical link, and see from early beginnings, wavelength multiplexing, etc., in terms of optical link, several segments allowed it to be completed. These units have several different components and modules. Lasers and combinations of modules. Next product we are bringing forward are wavelength modulators/multiplexers. This decreases systems costs and increases capacity. Very different products that allows this functionsto be developed. Not only yesterday’s products, but ones for the future, waveguide combining, silicon waveguides (allows 10 gig), optical interleavers (wavelengths in different colors for lower power systems). Optical amplifiers allowed this. Reduced systems costs and allowed new network architectures. We are participating. Raman, etc. Optical switching shows promise of bringing forward flexibility. Passive optical and mechanical, Chronos, allows development of optical switches at low cost. Entire portfolio in transmission and switching allows possibilities to partner with customers. Last year we announced several acquisitions. We have looked at industry, looked at needs, looked at needs, and where JDSU can improve chain of supply into transmission space. We have broadened portfolio and grown to where we are today. We have allowed efficiencies and prices for customers. We’re still working on last stages on our announced merger with SDLI --- but benefits refer to synergies of new products, broader line, faster introductions, increased modulator integration, and capacity for growing market. Creating way to be better partner for our customers.
Tony Mueller:
Grown rapidly. [shows graphs]
Guidance in CC was for seq. of 7 to 10%, somewhat lower than we had demonstrated. This is 31 to 46% y/y. We did reconfirm guidance for year for y/y sales above the base of 115 to 120%, though we indicated we’d be at low end. Our visibility has declined somewhat b/c of carriers. But growth of Internet and demand for bandwidth are growing rapidly. While near-term slowing it is no means a low rate of growth, we expect growth to resume in second half.
We are profitable. Profitability at 50 to 51%. Op margins are above 30% Above 28 - 30% guidance. Underlying demand is growing very quickly.
Report on acquisition of SDL: in July the value of two company’s shares it was largest high-tech merger in history. Deal calls for 3.8 exchange SDLI for JDSU. Proceeding with Hart Scott Rodino and last week issued an important press release for respective stockholder meetings had been rescheduled. We also indicated we had proposed a remedy. We are hopeful and optimistic DOJ will agree remedies will approve and that you will all vote for transaction. Everyone at JDSU is more enthusiastic than ever of completing the transaction.
Final thoughts: Very exciting products, technologies, markets growing quickly. There can be rapid changes. These create new economics. At JDSU we’re in position to impact economics. Pleased to be a part of it.
Q&A:
Q: Back-up plan in case merger doesn’t go through?
A: We have traditional JDSU approach. We set up Plan A, and never get around to Plan B, so have to make Plan A work.
Q: Required to make concessions, can you elaborate?
A: We didn’t use the word “concessions” we used “remedy.” It doesn’t help process to provide details. If DOJ doesn’t approve, we’ll have press release. Until then we can’t talk about it.
Q: Back-log, in view of layoff activity, how do reconcile that?
A: Back-log is combination of factors. Some customers have schedules attached. Other are based on annual forecasts from customers. Rate at which customers will pull finished goods is to some degree open-ended. Not good predictor of sales rates. We don’t enter forecast into backlog until we have an immediate order. Can be shipped in days.
Q: Layoff programs will not inhibit the filling of orders?
A: Layoff program in Ottawa is reflection of number of factors: a) uncertainty of near-term outlook b) active programs around productivity improvement b/c of automation c) expansion in China --- all factors are at work.. Add this up we feel good about longer term outlook. This is not layoff “program” this is an “event.” Program implies ongoing plans and we have no plans for that. This is one-time event. We do not expect world-wide reduction in our output.
Q: Where is most pricing pressure? Who is fiercest competitor in both active and passive?
A: Pricing implies 15 to 20% annual price declines. (High on passives and low on actives.) Offsetting price declines with productivity improvements. Competitors: they exist in different parts of industry. Growth in FO has brought considerable VC activity. LU microelectronics Agere are competitors, we also supply them. NT will spin off optics and, again, we are suppliers. GLW, again, we are competitors and suppliers. Most important is delivering products to customers.
Q: Passive products being higher pricing pressures, is it same for all passives?
A: We don’t give that level of detail.
Q: Term “uncertainty”, is it specific to FO, is it market-wide, is it coming to an end?
A: 2 or 3 quarters ago, if we looked at capital spending at each carrier, capital spending was increasing, and at times budgets were being exceeded. Growth was predictable. In latter half of Dec. many carriers had uncertainties re: capital spending. 1) hadn’t completed budgets 2) dramatic changes in economics of delivering data --- prices in services came down, 3) access to capital markets closed causing a hiatus or temporary slow-down in carrier spending. This has caused uncertainty in the near-term. The demand is continuing to grow rapidly. Best data points to Internet uses, bits transmitted, doubling every 100 days. This drive in demand will compel carriers to resume a high rate of capital spending, very soon, very likely in second or third quarter of year. We do know for a fact bandwidth growth is growing at a high rate and capacity must be supplied. In Jan. $12B raised, better than entire 4Q:00. We’re hoping markets open up.
Q: Plant in Zurich, will it hurt you? What components?
A: I’ll refer that question to the rumor department. Rumors about what remedy might be. We don’t want to speculate. We’ll provide details after we hear from DOJ.
Q: Capacity?
A: Expansion --- we’ve talked about it. Bullish about long-term growth. Task is to manage capacity expansion both long-term and short-term. In some cases we moderate expansion. It is not a contraction. Active side our expansion continues unabated. Still supply constrained. Those expansions continue around model we talked about. Europe, New Jersey, and so on.
Q: Acquisitions?
A: Company has grown successfully. Completion of product portfolio we will maintain philosophy that when suitable candidates allow opportunities we will act suitably.
Q: Stock price on M&A strategy?
A: General contractions have on balance been helpful in M&A. Prices in other companies have come down the same as ours. On a relative basis, shares we hold are down, but prices of what we might buy have also come down. We can acquire using less cash when price is down.
End of presentation |
