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.
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.
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