JDSU Reversing Course

JDSU (JDSU) is looking for a reversal of fortune.

The long-struggling tech company has asked shareholders to approve a reverse stock split that would finally lift its stagnant shares out of the doldrums.

With JDSU shares stuck below $2 for most of this year, the company says it needs to consolidate the share base to move into a price range more attractive to institutions. Many big mutual funds and other investors are prohibited from buying so-called penny stocks, those that trade for a dollar or two.

The move comes as JDSU has made a flurry of moves aimed at revitalizing its business and its image. Just this month it has dropped the JDS Uniphase name and acquired tunable laser maker Agility.

The optical networking parts maker has 1.6 billion shares outstanding and traded recently at $1.82. If shareholders approve the plan, which calls for a 1-for-8 or 1-for-10 reverse split, the company could reduce its share count to about 160 million, presumably bumping the share price into the midteens. JDSU hasn't traded there since the tech bubble popped several years ago. The stock fetched as much as $124.48 back in August 2000.

Boom, Bust JDSU's long decline

JDSU is one of several tech shops that issued shares by the wheelbarrowful in acquisitions and did a number of stock splits during the Internet building boom, back when the sky was the limit for telecom stocks. But the industry's fortunes collapsed in 2000 as big network spenders closed their wallets. As a result, JDSU is among a roster of big tech shops that finds itself saddled with an enormous share count and a low stock price.

Nortel (NT) has 4.2 billion shares outstanding. Telecom-equipment maker Lucent (LU) has 4.4 billion shares out. Both stocks have traded in the $3 range lately, well off their bubble-era highs.