Nortel Pall Continues to Cast Shadow on Opticals

Fiber optic companies continued to fall today, as it became clear that the slowdown talked about by Nortel (NT Quote) last week may be wider and deeper than expected.

Shares of the leading optical component maker, JDS Uniphase (JDSU Quote) were dropping after U.S. Bancorp Piper Jaffray analyst Conrad Leifur cut his rating to neutral from strong buy. Leifur said the impact from Nortel's forecasted shortfall could last into the September quarter for JDS Uniphase. Leifur also reduced JDS' earnings estimates for the March quarter to 16 cents per share from 17 cents and, for the year, to 69 cents from 74 cents. His company has done no underwriting for JDSU.

JDS has lost 40% of its value over the last month because of an earnings disappointment from Cisco, the Nortel announcement and its own warning about a shortfall in telecom spending. Nortel is JDSU's biggest customer. Some signs pointed to a dramatic shift in optical networking product demand as the culprit of many problems. TheStreet.com's Scott Moritz covered the story separately. ...