I have to admit, even asJDS Uniphase (NASDAQ:JDSU) shares dropped more than 3% to $4.87 in after-hours trading, I found yesterday's earnings report something of a relief.

When the fiber-optic components maker reported its first quarter back in October, I suggested -- more in passing conjecture than dead-set opinion -- that it might be time to buy. The communications business had seemingly stabilized; the cash flow breakeven point had fallen to $200 million; and the company was sitting on $1.16 billion in cash.

It seemed to me that for a company in JDS Uniphase's competitive position (with fewer and fewer competitors), the most important thing for investors was that JDS Uniphase had hit rock bottom. The idea was that the stock would perk up on any sign of a rebound.

Well, it's been in overdrive -- climbing from $3.37 the day after Christmas to yesterday's close at $5.04 -- though mostly on other company news. Two weeks ago, the stock got a boost from Juniper's (NASDAQ:JNPR) fantastic report. Then, a seemingly unsubstantiated buyout rumor involving Alcatel (NYSE:ALA), which had sold its own optical components business to Avanex (NASDAQ:AVNX) just last year, helped drive the shares up another 10% to $5.73 the next trading day.

The stock has pulled back very recently, but I think JDS Uniphase's second-quarter report justifies the recent run-up, at least somewhat.

Revenues rose 4% sequentially to a better-than-expected $153 million, with communications revenue coming in at $78 million -- roughly flat, but slightly better than each of the four prior quarters. While showing a GAAP loss of $0.04 per share, the business generated $7 million in cash flow from operations.

CEO Kevin Kennedy suggested that, "markets are stabilizing" and beginning "to show signs of growth." In fact, revenues are expected to climb another 1% to 7% sequentially, putting third-quarter revenue between $154.3 million and $162.2 million. The company also has "essentially completed" restructuring and expects cash flow breakeven to be down to $170 million by the fourth quarter.

What's more, JDS Uniphase now has $1.65 billion in cash on its balance sheet, after raising $463 million by means of its convertible debt offering.

While the rebound may not be as fast and furious as some investors had hoped, JDS Uniphase is in pretty good shape. What's not clear is just how big the company can be, and whether a rebound in business might not be quite fast enough to justify the share price.

Frankly, I don't know that I'd jump in with both fists at this point. That said, I don't see much risk in holding on to the shares I already have. Can that be what Wall Street originally meant by a "hold"?

Give us your take on the JDS Uniphase discussion board. Jeff Hwang owns shares of JDS Uniphase, and can be reached at JHwang@fool.com.