Updated from 5:10 p.m. EDT

Saying demand for optical networking parts is still falling,

JDS Uniphase

(JDSU)

warned Thursday of an 8% sequential decline in first-quarter sales.

A day after rival

Corning

(GLW) - Get Report

also posted weak financial results, forecasting a continuing slowdown in the telecom business that once propelled these stocks to breathtaking heights, JDS posted a billion-dollar fourth-quarter loss while meeting lowered expectations. Investors battered the stock, sending it down 16% to $2.53.

The bad news from JDS Uniphase, which also said it would have to further cut its workforce beyond the 60% reduction it has already undertaken, only underscores the sorry state of the telecommunications industry. After soaring into the stratosphere on an acquisition spree fueled by the Net building boom, JDS peaked shortly after the tech bubble burst in 2000 and has been steadily cutting employment and financial targets ever since. Its stock, more than 90% below its apex, has followed faithfully.

Dropping

Excluding one-time charges, the company posted a latest-quarter net loss of 10 cents a share on $222 million in sales, a 15% decline from the previous quarter and a 65% drop from year-ago levels. Analysts had expected a 4-cent loss on $209 million in revenue, according to a Multex tally.

On a GAAP basis, the company had a loss of $997 million, or 73 cents per share.

On the bright side, JDS did not burn through any additional cash, keeping its cash and short-term investments line at $1.45 billion. However, for the fourth quarter the company's gross margin dipped to a shocking minus 4% due to contract cancellations and low sales volumes. Executives expect those margins to widen to an anemic 8% at best.

The dour results come as little surprise, given that JDS sits at the end of a messy food chain that includes customers like

Nortel

,

Lucent

,

Ciena

and end customers including

WorldCom

,

Qwest

and

Sprint

, among others. Though JDS declined to offer specific performance projections, execs said hopefully that they may be seeing a leveling-off of declines -- though they added that there was certainly no upturn in sight.

Shaking Things Up

The company also named chip industry bigwig Syrus Madavi operating chief, replacing Gregory Dougherty, who left the company to care for a sick member of his family. The company also said Anthony R. Muller would leave at the end of the first quarter as he turns 60. JDS is looking for a replacement.

Madavi was formerly chairman of ON Semiconductors and held executive positions at

Texas Instruments

and Burr-Brown.

The new COO said he saw many great opportunities for the company and that the long-term outlook remained bright. "I'm confident we can meet the challenges of today and tomorrow," Madavi said on the earnings call after the markets closed Thursday.