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Picolight products help JDSU bounce back

Confident that a quarter-on-quarter drop in its optical communications business is just a blip, JDSU talks up the opportunities presented by VCSELs.

Fiber-optic module and laser company JDSU has attained revenue growth in all four of its business units in the 2007 fiscal year, despite recording an overall $26 million loss for the year.

On the back of annual sales of $1.4 billion, the Milpitas, California, company claims the quarter ended June 30 marked four consecutive quarters of positive earnings, according to its own unofficial figures.

The reconciliation of this interpretation with its annual loss includes JDSU s purchase of Picolight "“ the VCSEL maker that JDSU says will help push its margins upwards.

“The Picolight business creates opportunities for us through vertical integration of key components, specifically VCSELs or laser sources required for the datacoms side of the business,” said Kevin Kennedy, JDSU s CEO.

Nevertheless, revenues for JDSU s optical communications unit fell sequentially by 12 percent to $113 million in the latest quarter, even including the additional sales from Picolight.

“Several of our largest customers are involved in a number of product platform transitions, changes in supply chain and consolidation activity,” said Kennedy. “As a result we experienced lower demand from these customers.”

But JDSU s annual revenues in optical networking business still grew by 9 percent, and the company has now begun to see order levels regain strength.

Kennedy commented that newer lines, such as the pluggable modules provided by Picolight, and tunable lasers, performed better over the last quarter, as customers had not yet built up as much inventory as they had of JDSU's older products.

Year on year, JDSU saw growth in metro, long-haul, submarine and datacoms markets.

To emphasize that this is a wider trend that the company stands to benefit from, Kennedy quoted external research which anticipates annual doubling of global network capacity until 2011.

“We continue to see favorable end-market indicators for broadband services and network build-outs,” explained Kennedy. “We believe broadband capacities continue to expand as higher data rates are being delivered to the access edge, accompanied by video applications.”

Beyond optical communications, JDSU is finding other innovative ways to exploit its compound semiconductor laser technology, by expanding its application in the company's more general laser business.

“Our commercial lasers, focused on the transition from gas lasers to more reliable solid-state lasers, experienced double digit growth during the fiscal year,” Kennedy said.

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