August 26, 2010
You know JDS Uniphase (Nasdaq: JDSU ) as a leading provider of fiber-optic networking components. But did you know that the company also excels in next-generation video game innovation -- and in cutting sheet metal with fiber-optic lasers? Next up, I half-expect JDS to become a leading provider of shark-mounted lasers.
The laser-and-sensor specialist's fourth quarter showed that this surprisingly diverse business model can work wonders. GAAP revenue rose 43% year over year and 18% sequentially to $390.3 million, while the $0.29 year-ago loss per share transformed into a modest profit of $0.01 per share. This qualifies as a turnaround in any market, and JDS is just getting started.
Management shone the spotlight on a variety of business catalysts that are driving today's resurgence, and will continue to do so for several years:
- One is the global hunger for ever-higher networking speeds. JDS' optical networking components keep the fires burning under the biggest, baddest backbone routers from both Juniper Networks (Nasdaq: JNPR ) and Cisco Systems (Nasdaq: CSCO ) .
- A related factor is the coming rollouts of 4G wireless networking, which forces infrastructure investors like Verizon (NYSE: VZ ) to install beefier point-to-point backhaul networks in their cell towers. It matters not whether WiMAX or LTE wins this standards war: JDS stands to benefit either way.
- A new partnership with Japanese tooling giant Amada is leading JDS into the exciting world of kilowatt-powered fiber lasers for high-precision cutting of hard materials. That submarket of the larger industrial tools sector will grow to a $1 billion opportunity in three years, according to management's sources.
- And yes, you need lasers and optical filters to make gesture-sensing video game peripherals work. Microsoft (Nasdaq: MSFT ) uses not one but two JDS-built components in its Kinect controller; if this newfangled technology proves a hit with consumers, JDS hopes to sell lots of similar solutions to consumer-electronics designers of all stripes.
Which one of these market opportunities will be the catalyst for JDSU's growth over the next few years? Discuss in the comments below, and put me down on the betting line for a healthy balance between at least two of them.