JDS Uniphase (JDSU) to Split into Two Companies

Shares of JDS Uniphase Corporation (JDSU) were up +1.71 or +14.17 percent to $13.82 in Thursday's premarket, after the company announced late yesterday that they would be splitting the company into two publicly traded companies to promote growth. JDS Uniphase stock closed up +0.395 or +3.37 percent to $12.10 per share in Wednesday's regular trading session.

Milpitas, California based JDS Uniphase Corporation is a component of the S&P 500 and is the result of the 1999 merger of JDS Fitel and Uniphase Corporation in 1999.
The company specializes in the design and manufacture of products for optical networks, network equipment manufacturers, cable operators and telecommunications service providers. The company operates 80 offices that service clients in 160 countries.

The announcement yesterday stated that the company would commence a tax free spinoff of its commercial laser and optical components division with the remaining company, a network and service enablement company. JDS Uniphase expects the division into two companies to reduce expenses by approximately $50 million with the transaction to be completed by the company's third calendar quarter of 2015.

The stand alone optical components and commercial lasers company, will service the $7.4 billion optical communications market and is expected to grow at a rate of 11 percent compounded over the first four years. The company will also serve the $2.5 billion commercial lasers market and is expected to grow at a rate of seven percent per year.

The remaining company will address the $7 billion network and service enablement market with expectations of an annual growth rate of 6 to 8 percent. The company will focus primarily on investments in higher growth markets such as software supported and virtualized software defined networks. The optical security business will address a market calculated to be worth approximately $1.1 billion and is expected to grow at an annual rate of 6 to 8 percent.

JDSU President and Chief Executive Officer, Tom Waechter stated in the company's press release that, "These opportunities extend beyond the traditional telecom ecosystem and now include web services, over-the-top, enterprise and other customers. We believe two fundamentally focused companies best position us to stay ahead of the accelerating pace of technology change and to compete even more effectively across the unique markets we serve today. He continued, "Now is the time to make this transition, giving these businesses the opportunity to maximize their success while providing shareholders with distinct investment opportunities in two growth markets.

JDS Uniphase reaffirmed its guidance for the first quarter, which ends on September 27th with non-GAAP net revenue of $405 to $425 million and non-GAAP earnings per share of $0.08 to $0.12.
JDS Uniphase stock has come a long way since trading as high as $1054.50 per share in February of 2000. The stock has been under pressure since last October when it was trading over $16 per share. The market is indicating its approval of the spinoff, and the separate companies will provide shareholders with increased value.

Other News About JDS Uniphase
JDSU Appoints Paul McNab as Chief Marketing and Strategy Officer
Paul McNab appointed in a newly created executive position.
Activist Sandell Urged JDS to Explore Options
JDSU urged to hire advisers to explore its options prior to Wednesday's announcement.

Other Stocks in the News
R.B.S. and Lloyds Bank Say They'll Move if Scotland Votes for Independence
Companies state that they will move operations to England in the event of a yes vote.
Apple stock falls after announcements
Shares initially rallied during the event only to fall after the product presentations.

Published on Sep 11, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

Posted in ...