JDSU 1Q15 revenues beat guidance

Optical components/subsystems and test and measurement vendor JDSU (NASDAQ: JDSU) reported revenues of $433.6 million for its fiscal first quarter 2015, ended September 27, 2014. The amount exceeded the company’s guidance of $405 to $425 million, but was not enough to avert a losing quarter.

Optical components/subsystems and test and measurement technology vendor JDSU (NASDAQ: JDSU) reported revenues of $433.6 million for its fiscal first quarter 2015, ended September 27, 2014. The amount exceeded the company’s guidance of $405 to $425 million, but was not enough to avert a losing quarter.

Sequentially, 1Q15 saw revenues drop by $15 million – but loses dropped as well. JDSU ended fiscal 2014 with a GAAP net loss of $25.4 million ($0.11 per share) during 4Q14. Losses in the just concluded quarter amounted to $9.7 million ($0.04 per share). The company squeezed a GAAP profit of $0.3 million out of revenues of $429.0 million in the year ago quarter.

On a non-GAAP basis, JDSU saw net income of $33.8 million ($0.14 per share) in 1Q15, which again represented a decline from the previous quarter’s non-GAAP net profit of $34.2 million ($0.14 per share). In the first quarter of fiscal 2014, JDSU saw non-GAAP net income of $30.2 million ($0.13 per share).

GAAP gross margin dropped slightly on a sequential basis, from 46.7% to 46.0%. Non-GAAP gross margin also shrank from one quarter to the next, with the fiscal first quarter seeing 49.0% against the previous fiscal year’s fourth quarter showing 50%.

Having announced its intention to spin out its Communications and Commercial Optical Products (CCOP) business by the third quarter of next year (see "JDSU to split in two"), JDSU management was happy to report that CCOP's reviews improved both sequentially and year-on-year. The unit accrued revenues of $209.3 million versus $196.9 million in 4Q14 and $204.6 million in 1Q14. The lasers business was particularly strong year on year, making up for an approximate $9 million decline in revenues in sales in optical communications versus the year-ago quarter. That optical communications decline resulted from significant weakness in 3D sensing product sales. Both parts of the CCOP saw revenues increase sequentially.

Combined Network Enablement (NE) and Service Enablement (SE) revenues dropped sequentially, from $209.1 million in 4Q14 to $181.0 million in the recently concluded quarter. A sequential drop in NE revenues of $32.7 million more than ate up a sequential uptick of $4.6 million in SE sales.

Speaking to the upcoming spinoff, JDSU President and CEO Tom Waechter told attendees on an analyst call October 29 that CCOP head and spin-out CEO designee Alan Lowe has named current JDSU Vice President of Finance and Global Controller Aaron Tachibana as CFO designate of his new company.

"JDSU's strategy to diversify in non-telecom markets drove a solid first quarter as we exceeded revenue and EPS guidance and saw sequential growth in solutions for the enterprise and commercial lasers markets," said Tom Waechter, JDSU's president and CEO, via a press statement. "Enterprise market performance included growth in Datacom and Service Enablement, which generated an operating profit ahead of schedule. We are pleased with the performance of these growth drivers for CCOP, NE, and SE, and remain on track for the planned separation of SpinCo (CCOP) and NewCo (NE/SE/OSP) by calendar third quarter 2015."

Looking forward, management forecasted the second quarter of fiscal 2015 ending December 27, 2014 will see non-GAAP net revenue of $445 million within a range of $12 million and non-GAAP earnings per share will be $0.15 within a range of $0.03.

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