Previous Statements by JDSU
» JDS Uniphase Corporation - Analyst/Investor Day
» JDS Uniphase's CEO Discusses Q2 2012 Results - Earnings Call Transcript
» JDS Uniphase Corporation - Shareholder/Analyst Call
Please note that all numbers are non-GAAP unless otherwise stated. A detailed reconciliation of these non-GAAP results to our GAAP results, as well as a discussion of their usefulness and limitations, is included in today's news release announcing our results, which is available on our website at www.jdsu.com.As a reminder, the quarterly earnings press release, supplementary slides and historical financial tables are posted at www.jdsu.com/investors under the Investor Resources section. Finally, and as a reminder, this call is being recorded and will be available for replay from the Investors section of our website. I would now like to turn the call over to Tom. Thomas H. Waechter Thank you, Cherryl, and good afternoon. I will provide an overview of our March quarter and market trend before handing the call to Dave for a more detailed discussion of our financial results. JDSU delivered fiscal third quarter revenue of $409 million, within $1 million of the lower end of our guidance range. The March quarter, typically, has a seasonal revenue decline due to the timing of budget releases by carriers. This year, we experienced a later-than-expected budget and order release cycle. In addition, there has been continued cautious spending by European customers and a higher mix of deferred revenue from software and solutions sales. In spite of the slow start to the quarter, book to bill was above one for JDSU, as well as the CCOP and CommTest segment. CommTest had approximately 50% of its bookings take place in the last 4 weeks of the quarter, which impacted revenue by approximately $3 million. The AOT segment's book to bill came in slightly below one, following exceptionally strong bookings in December. Improved gross margin from CommTest and disciplined control of expenses resulted in an operating margin of 7.3%, at the high end of our guidance range. Each of the business segments was within or above the operating margin guidance ranges we previously provided. EPS was $0.11, and we continued our long streak of positive cash flow from operations. Although we saw lower-than-expected revenues in the quarter, I am pleased with the progress we have made towards obtaining CommTest and AOT target business models, along with a strong end of quarter booking.
During our Analyst Day in February, we presented business model targets and action plans for CommTest and CCOP. Specific actions we have taken include the following. In CommTest, a greater mix of software revenue led to a sequential increase in fiscal Q3 gross margin. We also took steps during the quarter to reduce our internal manufacturing support infrastructure, and we are working with our vendors to reduce our cost of materials. These actions are a part of a set of initiatives aimed at capturing gross margin improvement of 3 to 5 percentage points and operating efficiencies of 2 to 3 percentage points for the CommTest segment by the December quarter. Our confidence continues to grow that we will achieve the CommTest target model.In CCOP, we communicated a similar set of initiatives. In fiscal Q3, we completed the transfer of our fiber laser manufacturing to Asia. A number of differentiated products related to Self-Aware Networks will launch by calendar year end and contribute favorably to product mix. We continue to aggressively implement cost reduction and supply chain improvements across CCOP. AOT's operating margin of 33% for the March quarter was within the target model. Now to the market drivers and line-up of innovative products for our core markets. As we outlined during Analyst Day, JDSU's core business focus is on the network and providing anticounterfeiting solution. These 2 areas drive the primary growth of our business. Market drivers are strong and continue to strengthen for both networking and anticounterfeiting. We did, however, continue to see a gap between the strength of the network drivers and the level of spend by the network operators. We anticipate that this gap will close in the midterm, as network capacity remains stretched across the globe. Read the rest of this transcript for free on seekingalpha.com