JDSU fiscal 2012 second quarter exceeds management’s expectations

JDSU (NASDAQ: JDSU) (TSX: JDU) reported results for its second fiscal quarter pf 2012 ended December 31, 2011 that management said exceeded its expectations. But that doesn’t mean they didn’t show a decline.

GAAP net revenue was down both sequentially and year-on-year. Second quarter GAAP net revenue for the second fiscal quarter of 2012 was $412.8 million and net loss was $10.2 million, or $0.04 per share. The first quarter of 2012 came in at $420.8 million GAAP net revenue, a net loss of $5.8 million, or $0.03 per share. The results were even weaker in comparison to the year ago quarter. In the second quarter of fiscal 2011, JDSU reported net revenue of $473.5 million and net income of $23.6 million, or $0.10 per share.

Gross margin was 46.8% compared to 47.3% in the prior quarter and 48.8% in the second quarter of fiscal 2011.

Nevertheless, JDSU was encouraged, particularly in light of the relatively light touch the flooding in Thailand had on their revenues. JDSU’s contract manufacturing in Thailand occurs at Fabrinet’s Pinehurst facility, which resumed operations relatively quickly. "Our fiscal second quarter financial results surpassed our expectations. The outstanding efforts of our team and our manufacturing partner in Thailand coupled with our continued focus on expense control resulted in revenue and operating income that exceeded our guidance. Our balance sheet remains strong and we generated over $45 million of cash from operations during the quarter," said Tom Waechter, JDSU's president and CEO. "Looking ahead, we are pleased with the improving demand for our products, as evidenced by a book to bill of greater than one in each of our business segments, although we expect macroeconomic conditions to cause margin pressure in the near-term."

Looking at the performance of individual business units, the Communications Test and Measurement unit was the star. That group pulled in $196.2 million, an increased of 5.9% compared to the prior quarter – although a decrease of 15.2% compared to the second quarter of fiscal 2011. Revenue from this segment represented 47.5% of total net revenue.
Meanwhile, Communications and Commercial Optical Products earned $163.2 million, down 9.5% sequentially and 14.6% year on year. Revenue from this segment represented 39.5% of total net revenue. Within this segment, optical communications related revenue was $138.1 million, a decrease of 8.0% compared to the prior quarter and 18.0% compared to the second quarter of fiscal 2011.

The company struck a guardedly optimistic tone for the future, guiding non-GAAP net revenues for the third quarter of fiscal 2012, ending March 31, 2012, within the range of $410 to $425 million. Non-GAAP revenue for the second quarter was $413.1 million.