JDS Uniphase Corp (JDSU) Has Kicked off 2013 in Style

Page 1 of 2

In the first week of January, I had written about two stocks that I believed were nicely positioned to benefit from higher telco spending this year. I was quite confident about their prospects, given their solid products and the industry in which they ply their trade. But I’d never thought that one of them would shoot through the roof after a solid earnings report.

A perfect report

Optical networker JDS Uniphase Corp (NASDAQ:JDSU) gained 17% in a single day, after the company comfortably topped estimates in its just-reported second-quarter and issued a decent outlook. The company’s top line grew almost 5% from the year-ago period to $429 million while adjusted earnings grew almost 17% to $42.3 million or $0.18 per share.

JDS Uniphase CorpAlso, JDS Uniphase’s non-GAAP gross margin came in at a record 48%, which is the highest in the past two years. Moreover, outlook for the current quarter calls for revenue between $405 million to $425 million, at par with the consensus estimate at the mid-point.

Carriers to open their wallets

And this is just the beginning. Management is upbeat about the company’s prospects, and this optimism is driven by an expectation of increased investment in network infrastructure this year. Gartner expects a jump in global IT spending this year, driven by investments in data centers and telecom. Also, late last year, AT&T Inc. (NYSE:T) signaled its intention of stepping on the gas for boosting its networks.

The carrier intends to spend $14 billion over the next three years in a bid to enhance its wireless and wireline broadband network, and expand its 4G LTE coverage to 300 million customers by the end of 2014. Such investments by Ma Bell could spur other carriers into action as well, and this would in-turn translate into better revenues for companies such as JDS Uniphase.

Solid products mean more customers

JDS Uniphase has prepared a lineup of strong and innovative products to cash in on the build out of faster networks. Its new products, which are less than two years old, have been bringing in more than 50% of its core network-related revenue over the past seven quarters. Uniphase’s PacketPortal solution is finding great adoption and currently sports 11 customers, apart from 23 completed trials.

The company’s industry leading 4G LTE test solution should find more takers as roll out of 4G gathers steam. In addition, JDS Uniphase also seems well-positioned to benefit from growth in cloud computing and data centers. The company is preparing itself to launch products that satisfy cloud customers, and is in the last stage of winning several new contracts for this business.

Cloud and more

Management expects this foray into data centers to yield strong results, and might even become the fastest growing of all of Uniphase’s businesses. Moreover, the presence of Cisco Systems, Inc. (NASDAQ:CSCO) as a customer is another advantage for Uniphase’s data center business. Cisco’s data center segment is on a roll and witnessed an impressive sales growth of 61% in the previous quarter. And given Cisco’s aggressive investments into its data center strategy through its Unified Computing System platform, one can expect Uniphase to gain some goodies from its client.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!