A Focus Too Broad Is No Focus at All

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Stick one foot in the oven and the other in a bucket of ice water, and you should feel all right on average. Right?

Well, it doesn't really work that way, as JDS Uniphase (Nasdaq: JDSU  ) can attest. Its optical equipment operations are humming along just fine, but nobody wants to buy network test and measurement instruments. Overall, that adds up to 7% sales growth, to $381 million, but a net loss of $0.08 per share, compared to a loss of $0.03 last year.

Since most investors would prefer profits over revenue growth any day, JDSU's shares are falling like a rock today, while the broader market and closest rival Agilent (NYSE: A  ) move on up. Fellow optical expert Finisar (Nasdaq: FNSR  ) is limping, but not nearly as badly as JDSU.

Management pledged to "focus on advancing our business model across all of our business segments." In my opinion, that translates roughly to "no focus at all." I can respect the desire to meet every challenge and improve every unit, but don't call it "focus" -- because it ain't. Focus is what you do when you put more effort into one project than you do in others. And there's no need to put that spin on this report, because the company is actually in pretty good shape.

All the pessimistic expectations you can think of have already been priced into the entire networking sector. As of last night's closing bell, JDSU's shares had sunk by 55% year to date. Agilent and Cisco Systems (Nasdaq: CSCO  ) are within spitting distance of the S&P 500's 37% drop, but every other major player in this sector is doing significantly worse.

And JDSU has a strong balance sheet that should see it through a good stretch of bad times. Focus for real on the optical solutions to milk every possible penny out of that market while the going is good. Then invest in testing equipment once major testing customers like AT&T (NYSE: T  ) and Nortel Networks (NYSE: NT  ) start to feel comfortable in increasing their investments in their network infrastructure again. That testing equipment is much more important to network rollouts than day-to-day operations.

But for now, in my opinion, JDSU is showing no desire to play to its strengths while the opportunity is hot. As a result, I think we're a long way away from any serious rebound in this stock.

Further Foolishness:

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 766446, ~/Articles/ArticleHandler.aspx, 10/28/2016 3:02:35 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 5 hours ago Sponsored by:
DOW 18,169.68 -29.65 -0.16%
S&P 500 2,133.04 -6.39 -0.30%
NASD 5,215.97 -34.29 -0.65%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/27/2016 4:00 PM
VIAV $7.15 Down -0.10 -1.38%
Viavi Solutions CAPS Rating: ***
A $43.38 Up +0.01 +0.02%
Agilent Technologi… CAPS Rating: ***
CSCO $30.38 Down -0.17 -0.56%
Cisco Systems CAPS Rating: ****
FNSR $27.35 Down -2.14 -7.26%
Finisar CAPS Rating: ***
NT.DL $0.32 Down +0.00 +0.00%
Nortel Networks Co… CAPS Rating: **
T $36.52 Up +0.09 +0.25%
AT and T CAPS Rating: ****