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Red Ink Deepens at JDS Uniphase

The company posts a rare sales gain but promises to cut more jobs as the losses roll on.
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Updated from April 29

JDS Uniphase

(JDSU)

slipped Wednesday morning after a mixed earnings report Tuesday.

On the bright side, the company finally ended a 2-year-long sales slide. But the maker of parts for optical networking equipment offered tepid sales guidance and pledged to cut more jobs as profitability remains elusive.

The continuing attrition at JDS and rival

Corning

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point to the stark realities of the telecommunications market even as the shares of some beaten-down outfits rise. The eroding budgets and deepening distress at some of the industry's biggest spenders have made austerity the only way for many telecom suppliers to show financial progress.

JDS shares dropped 8 cents Thursday to $3.24. The stock has more than doubled off its 52-week low but remains substantially below its bubble-era high of around $150.

For its third quarter ended March 31, JDS posted a loss of $137 million, or 10 cents a share. That compares with the second-quarter loss of $215 million, or 15 cents a share, and the year-ago loss of $4.3 billion, or $3.19 a share. The year-earlier period was saddled with a huge writedown linked to the company's bubble-era acquisition spree.

On what JDS is now cumbersomely calling a "non-GAAP basis," which is to say excluding certain charges, the latest-quarter loss was $45 million, or 3 cents a share. That's roughly flat with the year-ago loss of $44 million, or 3 cents a share, and a bit narrower than the second-quarter loss of $93 million, or 7 cents a share.

The company called attention in a postclose press release to its sales line, which for the first time in many quarters showed an increase from the sequentially previous period. JDS said third-quarter sales ticked up 6% from second-quarter levels to $166 million, beating the Thomson/First Call consensus estimate of $158 million. But even the third-period showing marked a 37% decline from the year-ago $262 million, and amounted to an 82% plunge from JDS' quarterly sales peak, $925 million in the second quarter of 2001. Until today, the company's sales had fallen in every quarter since.

As a result of the continuing river of red ink flowing from the company, which is based in Ottawa, Canada, and San Jose, Calif., JDS said it would continue to cut jobs and close plants. The company said it has cut costs by some $1.1 billion since it began the slimming-down process two years ago, and that it would make at least $200 million in additional cash outlays under the program in an effort to further trim expenses. The company didn't say how many of its 6,400 workers might be laid off in future cutbacks.

And it's not clear how deep the cutbacks might be, considering how dim a picture the company continues to paint of its future. JDS said fourth-quarter sales would amount to $155 million to $165 million, while adding that break-even is nowhere in sight on a GAAP basis. The company promises to hit break-even on a non-GAAP basis, excluding all kinds of expenses, at revenue of $200 million -- a level the company hasn't hit since the fourth quarter of last year -- by the second quarter of next year.