JDS Uniphase (JDSU) Misses on Q2 Earnings and Revenues

JDS Uniphase Corporation (JDSU) reported second-quarter fiscal 2015 financial results wherein both the top and the bottom line missed the Zacks Consensus Estimate. The company’s adjusted earnings of 9 cents per share lagged the estimate by a penny.

However, JDS Uniphase reported GAAP net loss of $25.1 million or 11 cents per share in the reported quarter against a GAAP net income of $8.8 million or 4 cents per share in the prior-year quarter. Quarterly net revenue came in at $437.1 million, down 2.3% year over year and also below the Zacks Consensus Estimate of $445 million.

Adjusted gross margin stood at 49.1% in the second quarter compared with 48.5% in the year-ago quarter. Operating expenses (on a reported basis) climbed 12.7% to $208.7 million as both research and development expenses and selling, general and administrative costs were on the rise in the quarter. Meanwhile, adjusted operating margin improved to 9.9% from 9.1% a year ago. Quarterly adjusted EBITDA stood at $63.7 million as against $67 million in the year-ago quarter.

Liquidity

At the end of the second quarter, JDS Uniphase had $838.7 million of cash & marketable securities and 548.8 million of debt on its balance sheet compared with $849.4 million and 536.3 million, respectively, at 2014-end. The debt-to-capitalization ratio stood at 0.32 at the end of the quarter against 0.31 at the end-2014.

Revenue Segments

In the second quarter of fiscal 2015, the Network Enablement segment generated $133.7 million in revenues, down 14.2% year over year. Revenues from the Service Enablement division climbed 16.6% to $45.7 million. The Communications and Commercial Optical Products segment recorded $207.1 million in revenues, up 4.6% year over year. Within this segment, Optical Communications revenues came in at $167.1 million, down 4.2% year over year and Commercial Lasers business revenues stood at $40 million, up 70.2% year over year. The Optical Security and Performance segment accounted for the remaining $50.6 million of revenues, down 7.3% year over year.

Geographic Segments

In the second quarter, the Americas segment accounted for 43.3% of the total revenue, the Asia-Pacific region generated 34.3% while the remaining 22.4% was contributed by the Europe, the Middle East and Africa (EMEA) area.

Outlook

The company expects to record revenues (on an adjusted basis) of $418 million (+/- $10 million) in the third quarter of fiscal 2015. Adjusted earnings per share in the third quarter are projected at 9 cents (+/- 2 cents).

Update on Impending Split

JDS Uniphase has stated its intention to complete the process of splitting into two separate publicly traded companies by the third quarter of 2015. While one company (CCOP) will comprise 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 ShoreTel, Inc. (SHOR), ClearOne, Inc. (CLRO) and Corning Inc. (GLW). All the three stocks sport a Zacks Rank #2 (Buy).