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JDS Uniphase Tops on Q2 Earnings and Revs

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Yesterday, after the closing bell, JDS Uniphase Corp. (JDSU) declared strong financial results for the second quarter of fiscal 2014. Both the top and the bottom line outpaced the respective Zacks Consensus Estimate.

Moreover, management provided a solid revenue outlook for the ensuing third quarter of fiscal 2014. As a result, in the aftermarket trade on Nasdaq, the stock price of JDS Uniphase was up by 58 cents (4.56%) to $13.30.  

Quarterly net revenue was $447.6 million, up 4.2% year over year and also above the Zacks Consensus Estimate of $434 million. On a GAAP basis, quarterly net income from continuing operations was $8.8 million or 4 cents per share compared with $3.3 million or 2 cents per share in the year-ago quarter. However, quarterly adjusted earnings per share of 12 cents were well above the Zacks Consensus Estimate of 9 cents.

Adjusted gross margin, in the reported quarter, was 48.5% compared with 48% in the year-ago quarter. Operating expenses were $185.1 million, up 6.3% year over year. Adjusted operating margin was 11% compared with 11.4% in the year-ago quarter. Quarterly adjusted EBITDA was $67 million as against $65.9 million in the year-ago quarter.

JDS Uniphase generated $54.4 million of cash from operations in the reported quarter. At the end of the second quarter of fiscal 2014, JDS Uniphase had $1,065.4 million of cash & marketable securities and $524.2 million of outstanding debt on its balance sheet compared with $486.2 million of cash & marketable securities and no outstanding debt at the end of fiscal 2013. The debt-to-capitalization ratio was 0.30 at the end of the reported quarter. 

Revenue Segments

In the second quarter of fiscal 2014, the Network and Service Enablement segment generated $195 million of revenues, down 0.4% year over year. The Communications and Commercial Optical Products segment generated $198 million, up 6.6% year over year. Within this segment, Optical Communications revenues came in at $174.5 million, up 12.1% year over year and Commercial Lasers business revenues stood at $23.5 million, down 22.2% year over year. The Optical Security and Performance segment generated the remaining $54.6 million revenues, up 13.3% year over year.

Geographic Segments

In the second quarter of fiscal 2014, the Americas segment accounted for 47.8% of the total revenue, the EMEA segment generated 23.4% and the remaining 28.8% came from the Asia-Pacific region.

Future Financial Outlook

For the third quarter of fiscal 2014, management expects the company’s revenues to be within the range of $420-$440 million. JDS Uniphase expects strong demand from the upcoming 4G LTE network deployment in China. Additionally, the company is expecting demand to rise for 10-Gbps and 40-Gbps systems for data center and cloud computing network.

Other Stocks to Consider

JDS Uniphase currently has a Zacks Rank #3 (Hold). Other better-ranked stocks in the Communications Component manufacturing industry include Harmonic Inc. (HLIT), Premiere Global Services Inc. (PGI) and Envivio Inc. (ENVI). While Envivio currently carries a Zacks Rank #1 (Strong Buy), both Harmonic and Premiere have a Zacks Rank #2 (Buy).

Read the Full Research Report on HLIT
Read the Full Research Report on JDSU
Read the Full Research Report on PGI
Read the Full Research Report on ENVI

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