According to RBC Capital Markets, expect strong outperformance for the advanced optical technologies (AOT) segment of JDSU during tomorrow's release of its 4th Quarter 2008 results.
RBC Capital Markets Managing Director - Mark Sue commented to yours truly:
 "We're expecting encouraging results from JDSU with total revenues to come in slightly ahead of the consensus estimate of $396M and above the midpoint of the guidance range of $381 to $403M as the company recovered some previously slipped T&M deals." |
"Non-GAAP EPS may be closer to our $0.12 vs. the consensus of $0.10 due to product mix which may skew operating margins."
"At the moment, the stock is trading at 13X our CY09 earnings of $0.88."
"Considering the lumpiness of the business and some near term wireline capex pauses, we're maintaining our Sector Perform Rating."
"For FY1Q09, with an overall book to bill greater than 1.0, JDSU may provide revenues guidance in a range of $382M to $404M vs. the current consensus of $400M."
"JDSU may continue to emphasize short lead times and the book and ship nature of the CommTest division."
"Optical communications may see some magnified seasonality in the near term as vendor customers adjust to capex reductions at Sprint and lumpy cable builds."
"Having said that we've noted healthy demand for ROADM components."
"Overall gross margins may bounce back from depressed levels closer to 43.5% and we expect JDSU to reiterate its long term gross margins of 43-47% and its longer term operating margins of 10%."
"Nonetheless, the pace of operating margin recovery remains difficult to predict and we're estimating total operating margins of just 5.5%."
"By segment, Optical Communications may show encouraging sequential operating margin improvements from 4.6%."
"Strong outperformance is expected from the small but growing AOT segment in terms of revenues and margins."
"JDSU has evolved into a diversified optical portfolio company that is targeting growth opportunities in optical transport and access as well as broadband."
"The company's goal is to leverage its multiple products across a common customer base and to improve operating metrics."
"It's going to take a while for JDSU to reach the upper limits of its business model targets, in our opinion considering the current demand environment."
"Subsequently, forward earnings variability remains high, in our assessment."
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