JDSU 4/24 ( run $27 down $19) makes target, but warns
Firm sets restructuring, plans to cut 5,000 jobs
By Greg Morcroft & Ted Griffith, CBS.MarketWatch.com
Last Update: 4:23 PM ET April 24, 2001
SAN JOSE, Calif. (CBS.MW) - Fiber-optic industry leader JDS Uniphase Tuesday reported fiscal third-quarter profit that met lowered estimates, and announced it will close several facilities and eliminate 5,000 jobs, or 20 percent of its work force.
The company (JDSU: news, msgs, alerts) reported third-quarter pro-forma income of $160 million, or 14 cents per share, on sales of $920 million, compared to profit of $108 million, or 11 cents per share, on revenue of $485 million in the year-ago quarter. Earnings were in line with analysts' expectations, which had been reduced following a March profit warning.
Shares fell $3.34, or 13.8 percent, to $20.84. The stock is down 85 percent from its 52-week high of $140.50.
Third-quarter sales dropped 1 percent from the $925 million posted in the fiscal second quarter and the company warned of a further sequential decline in the fourth quarter.
JDS Uniphase said it expects fourth-quarter pro forma earnings per share will be 5 cents, on revenue of about $700 million, down 24 percent from the third-quarter level. The consensus analyst estimate for JDS's fourth-quarter earnings per share had been 12 cents, according to First Call/Thomson Financial. See company earnings release
During a conference call with analysts Tuesday morning, company executives declined to give specific financial forecasts for the 2002 fiscal year, which begins July 1.
"Given current uncertainties we have limited visibility on fiscal 2002," CFO Anthony Muller said during the call.
"We can't provide guidance for next [fiscal] year."
JDS Uniphase executives said the company needs to cut costs because of a sharp business slowdown.
Muller said the company had a "high level" of cancellations of orders in the third quarter. Muller said long-term agreements had not been canceled, however.
"We believe the level of cancellation has run its course or is close to having run its course," the CFO said during the call.
In addition to job cuts, JDS Uniphase said it would save money by shifting some operations to China to take advantage of the "favorable cost and tax environment" in that country. JDS has its main offices in Ottawa and San Jose, Calif.
JDS Uniphase's business has suffered as major customers, such as telecommunications equipment giants Nortel Networks (NT: news, msgs, alerts) and Lucent (LU: news, msgs, alerts) , endure a painful slowdown.
But analyst Robert Tango at William Blair & Co. said the pain may be near an end. Tango said he is optimistic because high-technology companies generally have indicated they expect a recovery toward the end of the year.
"There have been signs in the past month that the situation is more positive than what was happening in January and February," Tango said.
The analyst also said he is encouraged by the restructuring plan because it will lower costs and streamline operations. Tango said JDS Uniphase was in need of some reorganization following the acquisition of SDL Inc.
"This restructuring was the best news I heard in six months," Tango said. "This is exactly what they need to do."
During the conference call, CEO Jozef Straus said the restructuring will leave JDS well positioned when demand rebounds.
"While these are deep and profound changes for the company, we are confident we will be able to increase production to meet customer demand in the future," Straus said. "As we realign the business, we can focus on effectiveness and efficiency."
Straus said the current sales falloff is "only a temporary slowing in one of the great growth markets of our time."
JDS said it will take a fourth-quarter charge of $375 million to $425 million for severance and restructuring. The company estimated the downsizing would cut annual expenses by more than $250 million.
Pro forma income for the nine months ended March 31, was $545 million, or 51 cents per share, an increase of 112 percent from the $257 million, or 28 cents per share, earned in the same period a year ago.
Company officials also announced during the call that Zita Cobb, executive vice president, strategy and business development, will be taking a leave of absence to travel.
Greg Morcroft is New York news editor of CBS.MarketWatch.com.
Ted Griffith is a reporter for CBS.MarketWatch.com |
