Slow carrier orders send JDSU revenues down, loss up in third quarter

Citing slower than anticipated orders from carriers that affected both its test and optical communications lines, JDSU (NASDAQ: JDSU) (TSX: JDU) reported revenues in its fiscal third quarter ending March 31, 2012 missed the low end of its previous guidance by just under $1 million. The shortfall contributed to a loss for the quarter of $17.4 million on a GAAP basis.

The third quarter’s $409.2 million represented a sequential decline from $412.8 million and a year-on-year shortcoming versus $454 million in the third quarter of 2011 (all figures GAAP). The earnings number compared unfavorably to a GAAP net loss of $10.2 million in the previous quarter and $38.6 million in net income during the year-ago quarter.

GAAP gross margin was 41.5% for the quarter, compared to 46.8% in the prior quarter and 47.6% in the third quarter of fiscal 2011.

The Communications Test business unit took the hardest hit, with revenues of $177.8 million dropping by 9.4% versus 2Q12 and 6.0% compared to 3Q11. Conversely, the Communications and Commercial Optical Products group performed comparatively better. Its revenues rose 6.1% sequentially to $173.1 million – although this figure represented a year-on-year drop of 6.0%.

Addressing analysts during a conference call after his company released the quarter’s numbers May 2, JDSU President and CEO Thomas Waechter said that while the March quarter generally sees a decline, carrier behavior made the seasonal factors even worse. North America carriers released budgets and began making orders later than usual, Waechter asserted. Meanwhile, their European counterparts continued to keep their wallets closed in the face of the macroeconomic uncertainty that continues to grip the region.

Waechter said that his checks indicated that North American carriers should spend more money in the second half of this year than they will in the first half. He did not have equal optimism regarding future European spending.

The company has a number of new products related to self-aware networks lined up for release in the second half of the year, Waechter revealed.

Looking forward in the shorter term, JDSU CFO David W. Vellequette told participants on the call that company management expects fourth quarter fiscal 2012 non-GAAP revenues to fall between $415 million and $435 million.