Pulse: JDS Uniphase-SDL Merger Close Could Be in Sight

Please tell me it's over.

Earlier this week, fiber-optics components makers JDS Uniphase (JDSU Quote - Cramer on JDSU - Stock Picks) and SDL (SDLI Quote - Cramer on SDLI - Stock Picks) postponed, for the second time, their shareholders' meeting over their pending merger until Feb. 12. This time, there might be something to vote on.

During Thursday's conference call, JDSU CFO Tony Muller dropped this hint, according to a transcript filed yesterday with the Securities and Exchange Commission:

"While press reports viewed this news as just another rescheduling, you should look at this as a strong indication that we could be nearing the end of the process of closing this important merger."

Whew! Can it be?

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The antitrust snag to the stock deal has been that the merger would create a company with a dominant market position in pump lasers, which speed data-carrying light impulses along fiber-optic lines. And that has created some long and heartfelt conversations with the Justice Department.

The most often-heard solution is that the combined company will escape the anti-competitive noose by selling a pump laser fab it will own in Zurich, Switzerland. There is no immediate deadline: SDL's board can extend the deal until March 31 if legal closing requirements haven't been met by the end of the month.

Epoch Partners analyst Mark Langley, who has been out front since July speculating that the Zurich plant would be the key to antitrust approval, said he thinks the purchaser is likely to be either Furukawa or Nortel (NT Quote - Cramer on NT - Stock Picks).

That news may have helped JDSU come back strongly today, after closing down 12.5% Thursday. JDSU finished up today $4.44, or 8%, to $59.63. Merger-partner SDL was up $18.81, or 9.4%, to $218.

Thursday, JDSU and SDL shares dropped when fiber-optic cablemaker Corning (GLW Quote - Cramer on GLW - Stock Picks) raised concerns over near-term growth. Corning's stock lost 19.8% Thursday and fell again Friday, closing down $1.25, or 2.2%, to $55.

After the market closed Thursday, JDSU posted earnings that beat estimates, but it also warned that near-term growth might be weaker this quarter.

Analysts, however, gave JDSU better chances than most to weather any short-term slowdown in demand.