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JDS Uniphase Snaps Up GenComm

Zacks Equity Research

Recently, JDS Uniphase Corp. (JDSU) completed the acquisition of South Korea-based GenComm for an undisclosed amount. JDSU declared its intention to acquire GenComm, the wireless test and measurement solution provider, on August 14, 2012.

JDSU, through its Communication Test and Measurement segment, provides instruments, service-assurance systems, and services to help original equipment manufacturers like GenComm to design, deploy, and maintain communication equipment and networks. These services are being used by wireless service providers, cable operators and contract manufacturers around the world to improve the services for their users.

Recently, JDS Uniphase posted solid financial results for the fourth quarter of fiscal 2012. Both the company’s net revenue of $439.3 million and adjusted EPS of 10 cents surpassed Zacks Consensus Estimates.

We believe Milpitas-based JDSU is acquiring GenComm to gain leverage from its wireless expertise, as well as its innovative new technologies to support 2G, 3G and LTE networks. The acquisition will further help the company to attain a foothold in the fast growing Asia-Pacific region.

This is the second acquisition of the company in less than a year after it acquired Vancouver-based Dyaptive Systems in January. The company is increasing its presence in the Communication Test and Measurement segment as it faces stiff competition in the Optical Networking component sector from the likes of Finisar Corp. (FNSR), Oplink Communications Inc. (OPLK) and Oclaro Inc. (OCLR).    

The current Zacks Consensus Estimate for JDS Uniphase Corp. is pegged at 9 cents for the first quarter of fiscal 2013. For fiscal 2013 and 2014, the Zacks Consensus Estimates stand at 66 cents and 89 cents, respectively, with a growth rate of 106.25% and 34.85%.


We are maintaining our long-term Neutral recommendation on JDS Uniphase Corp. Currently, it has a Zacks #4 Rank, implying a short-term Sell rating on the stock.

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