Can JDS Uniphase Earnings Stop Shrinking This Quarter?

JDS Uniphase (VIAV -1.50%) will release its quarterly report on Tuesday, and the provider of fiber-optic and other data-transmission equipment has seen its shares climb substantially recently, as investors start to see customers pick up their spending in the important sector. Yet, if that optimism doesn't trickle down to produce gains in JDS Uniphase earnings soon, shareholders might well lose their confidence in the stock.

It's hard to discuss JDS Uniphase without noting the company's fall from grace during the 2000-2002 bear market, with the stock having fallen between 98% and 99% from its highs during the tech boom. Still, the company has done its best to carve out a niche in the technology world, and has recovered substantially from its worst days during the financial crisis. Let's take an early look at what's been happening with JDS Uniphase over the past quarter, and what we're likely to see in its quarterly report.

Stats on JDS Uniphase

Source: Yahoo! Finance.

Will JDS Uniphase earnings start climbing again?
Analysts have been largely unchanged in their views on JDS Uniphase earnings, keeping June-quarter predictions unchanged, and trimming just $0.01 per share from fiscal 2014 estimates. The stock, though, has reflected more bullish sentiment, climbing 7% since early May.

What's somewhat surprising is how shares of JDS Uniphase overcame their drop after reporting disappointing earnings for the March quarter. The company once again cited delays in capital expenditures from key customers that, in turn, hurt JDS Uniphase's revenue, and guidance for June-quarter revenue didn't give investors the growth expectations they had hoped to see.

But prospects for the fiber-optic industry appear to have gotten better during recent months. In early June, optical-networking rival Ciena (CIEN 0.40%) reported a 6% jump in revenue and an unexpected profit, and investors took the strength in Ciena's results as reflecting not just on its individual success, but as a sign of a broader rebound throughout the network-infrastructure industry. Finisar (FNSR) confirmed that optimism earlier this week, offering preliminary guidance showing stronger sales than expected. As major telecom players have committed billions of dollars toward new capital investment and wireless network infrastructure expansion, JDS Uniphase should also share in the upswing of the cyclical business.

Moreover, JDS Uniphase has been taking care of its own business. In May, the company paid off more than $160 million in convertible notes originally due to mature in 2026. With a relatively healthy balance sheet, JDS Uniphase has the financial flexibility to consider a number of strategic moves, including potential acquisitions to ramp up capacity in the face of better industry conditions.

In the JDS Uniphase earnings report, it'll be crucial for the company to post the same growth figures that Ciena and Finisar have managed. Otherwise, investors could conclude that JDS Uniphase has missed out on a cyclical boom, and that in turn could lead to a mass exodus away from the stock.

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