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JDS Uniphase (JDSU) is heading in a new direction.

The San Jose, Calif., company agreed to buy closely held optical system testing specialist


for $760 million in cash and stock. Shares in JDS fell 3% in late trading.

Germantown, Md.-based Acterna makes testing and maintenance systems used by telcos to evaluate the performance of optical networks.

The move is a dramatic change of direction for optical parts maker JDS, which has been struggling to regain its footing since the collapse several years back of the telecom network-building industry.

Just in the last month, the company has

cooled its already tepid quarterly guidance and

set plans to fire 700 people while shutting down several North American production facilities.

System testing is a growing niche within the larger networking market. JDS says the deal will be accretive to its bottom line and accelerate the company's swing to profitability. For the 12 months ended in March, Acterna's gross margins exceeded 50% on $440 million in revenue. By contrast, JDS posted gross margins of around 15% on revenue of $166 million in its latest quarter ended March 31.

"Broadband and optical solutions are foundational to the growth of IP-based residential and business services," said JDS chief Kevin Kennedy.

JDS will pay $450 million in cash and $310 million in common stock. The stock part of the deal would have JDS issuing 200 million common shares. The company has 1.45 billion shares outstanding, according to Yahoo! Finance.

The deal is expected to close in the third quarter ending Sept. 30. Acterna has 1,770 employees who will become JDS Uniphase's Communications T&M product group. Acterna CEO John Peeler will head the unit.

JDS shares were down 4 cents to $1.51 in postclose trading Monday.