JDS Uniphase Cuts Jobs, No Sign of Turnaround
{{#rendered}} {{/rendered}}JDS Uniphase Corp. , the world's largest supplier of fiber-optic components, said Thursday that sagging fourth-quarter sales would lead to 16,000 job cuts and a huge net loss of $7.9 billion, and added there was no sign of an early turnaround.
In a pessimistic statement dismissing the chance of a "positive reversal in the downward trend of the industry," JDS also said it was writing down $38.7 billion in goodwill, effectively admitting it paid too much for companies acquired during the tech boom of years gone by.
The Ottawa-based company said it made a loss of $477 million, or 36 cents a share, in the fourth quarter ended June 30, compared with a profit of $137 million or 14 cents a share in the year earlier period. After all charges, it reported a net loss of $7.9 billion or $5.99 cents a share.
{{#rendered}} {{/rendered}}That is a huge figure, but still small compared to the massive $19.4 billion quarterly loss reported by Canadian telecoms giant Nortel Networks earlier this month.
JDS said fourth-quarter revenues fell to $601 million from $641 million, in line with company guidance given in mid-June.
"This should shake the idea that we're at the bottom...there's still more," said Anthony Scilipoti of Veritas Investment Research, commenting on the figures.
{{#rendered}} {{/rendered}}"It's just in line with what Nortel said. The rest of the year there's not going to be anything. Forget about this second half-year recovery. Everyone's coming out now and telling us it's not going to happen."
JDS stock fell to $8.10 in U.S. after-hours trading after the results were announced. The shares had closed at $9.47 in the United States and at C$15.10 in Toronto.
JDS said it would take charges of $900 million to $950 million, including $500 million incurred in the fourth quarter, to account for obsolete inventory, accelerated depreciation, and with moving and employee costs related to the phasing out of facilities.
{{#rendered}} {{/rendered}}It said its global realignment program will result in the elimination of 16,000 jobs, or which 9,000 were cut by the end of the current quarter. That is far higher than previous layoff figures of 5,000.
JDS is also taking charges of $270 million to write down excess inventory related to lower sales forecasts in the fourth quarter.
The restructuring should reduce annual expenses by $700 million and create a cost structure that results in break-evenfinancial performance at $350 million in quarterly sales.
{{#rendered}} {{/rendered}}In mid-June JDS chopped its sales forecast to $600 million from a previous estimate of $700 million, and predicted a loss and $425 million of realignment charges.
The company said it now expects sales in the first quarter ending Sept. 30 to fall below earlier guidance, although it would not provide guidance for future periods.
JDS is also writing down the carrying value of goodwill on its books by $38.7 billion, mainly due to the acquisitions of SDL, E-TEK, Optical Coating Laboratory, and the merger of JDS FITEL and Uniphase in June 1999.
{{#rendered}} {{/rendered}}Shares of JDS last traded C$1.08 higher at C$15.10 on the Toronto Stock Exchange Thursday prior to being halted in Toronto and in the United States.
Company officials said the stock was halted after a hacker got into its website and got hold of a draft of the eagerly awaited earnings release.
JDS shares have lost 31 percent since the company's June warning. In the same time frame, competitor Ciena Corp is down 28 percent, while Corning Inc is off 3.7 percent.
{{#rendered}} {{/rendered}}JDS stock hit a high of C$206 last summer, as tech stocks soared on expectations that the boom would never end.
($1-$1.53 Canadian)