Finisar Jumps on JDS Uniphase's Good News

Finisar (FNSR) was up 11% yesterday after good news from its competitor, JDS Uniphase Corporation (JDSU) (which lifted that stock 28%).

On Tuesday, JDS Uniphase reported that fiscal second-quarter revenue rose 9% to $399.2 million. FY Q2 net income fell 8.6% to $21.2 million, or 9¢ per share, from $23.2 million, or 10¢ per share, a year earlier. If you exclude onetime gains and benefits, JDS said earnings would have totaled 22¢ per share in the quarter ended Dec.ember 29.

On that basis, JDSU easily beat analyst consensus for earning of 12¢ per share on revenue of $386.4 million.

Even better news at a time when the market is full of bad news, JDSU indicated their Q3 revenue might also beat analyst estimates of $390.2 million. JDSU predicted sales of $380 million to $402 million.

This great news from JSDU was enough to have FNSR up 11% yesterday.

Finisar remains a good GARP (Growth At a Reasonable Price) stock.

Key Statistics for Finisar (FNSR) according to Yahoo! Finance:

• Market Cap (intraday): 540.11M
• Enterprise Value (6-Feb-08): 647.18M
• Trailing P/E (ttm, intraday): N/A
• Forward P/E (fye 30-Apr-09) 1: 14.58
• PEG Ratio (5 yr expected): 1.81
• Price/Sales (ttm): 1.20
• Price/Book (mrq): 2.86

Balance Sheet

• Total Cash (mrq): 106.02M
• Total Cash Per Share (mrq): 0.344
• Total Debt (mrq): 262.47M
• Total Debt/Equity (mrq): 1.528
• Current Ratio (mrq): 1.394
• Book Value Per Share (mrq): 0.556

Key Statistics for JDS Uniphase (JDSU) according to Yahoo! Finance

• Market Cap (intraday)5: 2.87B Enterprise Value (6-Feb-08)3: 1.85B
• Trailing P/E (ttm, intraday): N/A
• Forward P/E (fye 30-Jun-09) 1: 18.44
• PEG Ratio (5 yr expected): 0.78
• Price/Sales (ttm): 1.55
• Price/Book (mrq): 1.27

Balance Sheet

• Total Cash (mrq): 1.12B
• Total Cash Per Share (mrq): 5.089
• Total Debt (mrq): 733.00M
• Total Debt/Equity (mrq): 0.418
• Current Ratio (mrq): 5.432
• Book Value Per Share (mrq): 7.992

The acknowledged trouble with the sector is that it needs consolidation because profit margins are low with too many suppliers chasing too few companies, like Cisco (CSCO). The leaders are Finisar, privately held Avago Technologies (where I used to work on fiber optics in the 1980s and early 1990s when before it was spun off of HP (HPQ) as Agilent) and JDS Uniphase.

Jim Cramer fans will remember that he liked the stock in the $4s and $5s but gave up on it with this bearish call in May 2007 when it dropped to around $3. Will he get back into it before its next run or will he wait again for $4?

I like Finisar and have added to it at these low prices. I expect to take profits as fiber comes back into fashion, especially after TV personalities like Jim Cramer start to talk about it again, but I consider it a good long-term investment for those who can stomach its high volatility.

Disclaimer: I own and recommended Finisar in "Kirk Lindstrom's Investment Newsletter" where I buy and sell it around a core position for a current "break-even" price of $1.53 after two recent purchases at lower prices. (That is, recent purchases have increased my break-even price.)