JDS Uniphase Tops Q1 Earnings on Revenue Strength - Analyst Blog

JDS Uniphase Corporation's (JDSU) first-quarter fiscal 2015 (ended Sep 27, 2014) earnings (excluding special items) of 7 cents per share topped the Zacks Consensus Estimate of 4 cents. Adjusted earnings were, however, flat year over year.
 

 

Including special items, JDS Uniphase reported a loss of 4 cents which compared unfavorably to the year ago breakeven earnings. Quarterly net revenue came in at $433.6 million, up 1.1% year over year and well ahead of the Zacks Consensus Estimate of $416 million.

Adjusted gross margin stood at 49% in the first quarter compared with 46.3% in the year-ago period. Operating expenses (on a reported basis) climbed 9.2% to $195.1 million as both research and development expenses and selling, general and administrative costs were on an upswing during the quarter. Meanwhile, adjusted operating margin improved to 9.1% from 8.3% a year-ago. Quarterly adjusted EBITDA stood at $59.1 million as against $53.2 million in the year-ago quarter. Meanwhile, the overall book-to-bill ratio for the company was less than 1. The debt-to-capitalization ratio stood at 0.15 at the end of the reported quarter.

Revenue Segments

In the first quarter of fiscal 2015, the Network Enablement segment generated $132.8 million in revenues, down 8.5% year over year. Revenues from the Service Enablement division climbed 79.9% to $48.2 million. The Communications and Commercial Optical Products segment recorded $209.3 million in revenues, up 2.3% year over year. Within this segment, Optical Communications revenues came in at $167.1 million, down 5.2% year over year and Commercial Lasers business revenues stood at $42.2 million, up 48.6% year over year. The Optical Security and Performance segment accounted for the remaining $43.3 million of revenues, down 17.5% year over year.

Geographic Segments

In the first quarter, the Americas segment accounted for 44.7% of the total revenue, the Asia-Pacific region generated 31.1% while the remaining 24.2% was contributed by the Europe, the Middle East and Africa (EMEA) area.

Outlook

The company expects to record revenues (on an adjusted basis) of $445 million (+/- $12 million) in the second quarter of fiscal 2015. Adjusted earnings per share in the second quarter are projected at 15 cents (+/- $3 cents). The Zacks Consensus Estimate for the second quarter of fiscal 2015 currently hints at earnings of 12 cents per share on revenues of $448 million.

Update on Impending Split

JDS Uniphase has stated its intention to complete the process of split into two separate publicly traded companies by the third quarter of calendar 2015. While one company (CCOP) will comprise of JDS Uniphase's Communications and Commercial Optical Products segment, the other will include the Network Enablement, Service Enablement and Optical Security and Performance Products divisions.

Zacks Rank

JDS Uniphase currently has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include 8x8 Inc. (EGHT), ClearOne, Inc. (CLRO) and Gigamon Inc. (GIMO). All the three stocks sport a Zacks Rank #1 (Strong Buy).

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