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Optical comms aid JDSU to profitability

Improved sales from more lucrative products have helped deliver a successful quarter for the US company, with a financial contribution that it says will be sustainable.

A resurgent optical communication division has helped JDSU swing back to profit, although global economic concerns are keeping the company s crystal ball cloudy.

The division has achieved a positive operating margin for the final quarter of 2008, its first in over a year, whilst also growing its sales by 12 percent to $129.7 million.

Broadband network market expansion helped the overall company grab revenue of $399.2 million, from which it recorded a profit of $21.2 million. These figures improved from sales of $356.7 million and a loss of $6.9 million in the previous three months.

Sales of JDSU s reconfigurable optical add-drop multiplexer (ROADM) technology, products that allow simple addition or removal of optical channels, grew by 39 percent. This brought total sales for the quarter in this area to 2500 modules, enough for the company to claim market leadership.

10 Gbit/s products also experienced rapid growth, with transceivers and transponder sales expanding 32 percent sequentially. These trends mean that JDSU is now selling a more profitable mix of products, with improved factory utilization and manufacturing costs that it anticipates retaining.

“We now expect the optical communications business to achieve and sustain 20 to 30 percent gross margins and 5 to 15 percent operating income,” said Kevin Kennedy, JDSU s CEO.

Despite these positive signs, JDSU is predicting sales for the next quarter covering a range that only allows for a $3 million company-wide increase. This is more reflective of the state of the world than the situation at JDSU, according to Kennedy.

“My greatest fear is what I don t know, but I felt that that the growth in eight out of nine top customers on optical components was a very positive outcome,” he explained.

“We haven t sensed a negative trend at this point.”

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