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JDS Uniphase


and other suppliers of fiber-optic components had their economic fortunes reduced yet again this morning.

The latest reduction comes courtesy of

Lehman Brothers

, which lowered earnings estimates on JDS Uniphase,




Applied Micro Circuits





. Lehman said it made the revisions because of inventory problems and the companies' limited ability to forecast near-term business growth.

Credit Suisse First Boston

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Charlie Glavin jumped into the fray, downgrading PMC-Sierra to hold from buy, citing "industry conditions that have actually gotten worse over the last few weeks." Glavin also cut Applied Micro Circuits to buy from strong buy due to soft March and June orders. Last week, CSFB and

Merrill Lynch

reduced JDS Uniphase's earnings estimates.


visibility is extremely poor as order cancellations and push-outs make it extremely difficult to predict the final outcome of the March quarter, let alone the June quarter," Lehman analyst A. Chanda wrote to investors. "We are therefore reducing our estimates."

  • JDS Uniphase's 2001 and 2002 earnings estimates were trimmed below Wall Street consensus estimates, due mainly to poor visibility and the ramifications of Nortel Networks' (NT) earnings warning last week. Earnings for 2001 are now expected to be 72 cents a share, down from 74 cents, on a revenue forecast of $3.8 billion, $100 million lower than the previous estimate. Earnings for 2002 are forecast at 74 cents a share, down from 86 cents. "We believe that it is likely that JDS revenues will slow, especially in the passive arena where inventory builds are most acute and price competition is likely to emerge first," Chanda wrote.
  • Applied Micro's 2001 earnings-per-share estimate was trimmed by a penny to 56 cents from 57 cents, and its 2002 earnings-per-share estimate was slashed to 67 cents from 80 cents. Revenue for 2001 is now pegged at $674 million, down from $828 million.
  • Broadcom's 2001 earnings-per-share estimate was slashed by 18%, to $1.25 from $1.53, with Lehman pointing to multiple issues. Among them: inventory problems at customers Motorola (MOT) and Cisco (CSCO) - Get Cisco Systems Inc. Report, slowing growth for cable modems, plus increased competition from competitors like Marvell (MRVL) - Get Marvell Technology Inc. Report. The revenue estimate for 2001 was cut to $1.85 billion from $2.26 billion.
  • PMC-Sierra received a mild slap from Lehman, which said the company was the least likely of the four to reduce estimates going forward. PMC Sierra's 2001 earnings estimate was lowered to 70 cents a share from 84 cents a share, while the revenue forecast was cut to $691 million from $800 million.

After a rip-roaring January, technology components suppliers have fallen lower and lower in February as companies continue to complain that the next few quarters will be weak or admit they're not sure of the outlook for the first half of 2001. JDS Uniphase gained 31.5% in January only to stumble 34.7% in February as its competitors warned about slowdowns.

Joe Kalinowski, equity strategist with

First Call/Thomson Financial

, said that 289 companies have already preannounced for the first quarter, and almost a third of those are technology-related businesses. In comparison, only 33 companies had said anything about the first quarter at this point last year.

As these preannouncements flood the market, look for more analyst adjustments, market movements and sleepless nights -- because sometimes, the only problem with improving visibility is not enjoying the view.


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