Yesterday, after market close, JDS Uniphase Corp. (JDSU) declared its first quarter of fiscal 2011 financial results. Quarterly net revenue was $405.2 million, falls below the Zacks Consensus Estimate of $417 million. As a result, in the after market trade on NASDAQ, stock price of JDS Uniphase Corp. was down by 35 cents (3.15%) to $10.77.
However, first quarter of fiscal 2011 revenue was an improvement of 36.3% year over year. This was primarily due to healthy demand for the company’s optical networking equipments together with the acquisition of the Network Solutions Division of Agilent Technologies, Inc. (A).
On a GAAP basis, quarterly net income was $0.1 million or a break-even per share compared to a net loss of $31.9 million or a loss of 14 cents per share in the year-ago quarter. However, quarterly adjusted (excluding special items) EPS was 16 cents, well above the Zacks Consensus Estimate of 12 cents.
Gross margin in the reported quarter was 42.8% compared to 39.3% in the year-ago quarter. In the same quarter, operating expenses were $172.5 million, up 19.3% from the prior-year quarter. However, EBITDA in the first quarter of fiscal 2011 was $38.3 compared to just $6 million in the prior-year quarter.
At the end of the first quarter of fiscal 2011, JDS Uniphase had $590.8 million of cash & marketable securities and $271.6 million of outstanding debt on its balance sheet compared to $572.7 million of cash & marketable securities and $267.3 million of outstanding debt on its balance sheet at the end of fiscal 2010.
At the end of the first quarter of fiscal 2011, debt-to-capitalization ratio was 0.23 compared to 0.23 at the end of fiscal 2010. JDS Uniphase generated $35 million of cash from operations in the reported quarter.
Revenue Segments
In the first quarter of fiscal 2011, Communications Test and Measurement segment accounted for $182.8 million of revenue, up 27.5% year over year. Communications and Commercial Optical Products segment accounted for $168 million, up 66.2% year over year.
Within this segment, Optical Communications revenue was $143 million, up 66% from the prior-year quarter and Commercial Lasers business revenue was $25 million, up 66% from the prior-year quarter. Advanced Optical Technologies segment generated the rest $60.5 million revenue, up 11.8% year over year.
Geographic Segments
In the first quarter of fiscal 2011, the Americas segment accounted for 50% of total revenue, the European segment accounted for 25%, and the rest 25% was generated from the Asia-Pacific region.
Future Financial Outlook
For the second quarter of fiscal 2011, management is expecting that the company’s non-GAAP revenue will be within the range of $425 million – $450 million.
Recommendation
We maintain our long-term Neutral recommendation for JDS Uniphase. Currently it is a short-term Zacks #4 Rank (Sell) stock. This is mainly due to overall weak demand for the Optical Networking Component sector.
